(State or Other Jurisdiction of Incorporation or Organization) | (IRS Employer Identification No.) | ||
(Address of Principal Executive Offices) | (Zip Code) |
Title of Each Class | Trading Symbol(s) | Name of Each Exchange on which Registered | ||||||
þ | Accelerated Filer | ☐ | Non-accelerated Filer | ☐ | Smaller Reporting Company | Emerging Growth Company |
PART I - FINANCIAL INFORMATION | ||
Page | ||
Item 1. | Financial Statements: | |
Interim Consolidated Statements of Income | ||
For the Three and Nine Months Ended September 30, 2019 and 2018 | ||
Interim Consolidated Statements of Comprehensive Income | ||
For the Three and Nine Months Ended September 30, 2019 and 2018 | ||
Interim Consolidated Balance Sheets | ||
As at September 30, 2019 and December 31, 2018 | ||
Interim Consolidated Statements of Cash Flows | ||
For the Three and Nine Months Ended September 30, 2019 and 2018 | ||
Interim Consolidated Statements of Changes in Shareholders' Equity | ||
For the Three and Nine Months Ended September 30, 2019 and 2018 | ||
Notes to Interim Consolidated Financial Statements | ||
Item 2. | Management's Discussion and Analysis of Financial Condition and Results of Operations | |
Executive Summary | ||
Performance Indicators | ||
Financial Highlights | ||
Results of Operations | ||
Liquidity and Capital Resources | ||
Share Capital | ||
Non-GAAP Measures | ||
Off-Balance Sheet Arrangements | ||
Contractual Commitments | ||
Critical Accounting Estimates | ||
Forward-Looking Statements | ||
Item 3. | Quantitative and Qualitative Disclosures about Market Risk | |
Item 4. | Controls and Procedures | |
PART II - OTHER INFORMATION | ||
Item 1. | Legal Proceedings | |
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | |
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits | |
Signature |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars, except share and per share data) | 2019 | 2018 | 2019 | 2018 | ||||||||
Revenues (Note 3) | ||||||||||||
Freight | $ | $ | $ | $ | ||||||||
Non-freight | ||||||||||||
Total revenues | ||||||||||||
Operating expenses | ||||||||||||
Compensation and benefits | ||||||||||||
Fuel | ||||||||||||
Materials | ||||||||||||
Equipment rents | ||||||||||||
Depreciation and amortization | ||||||||||||
Purchased services and other | ||||||||||||
Total operating expenses | ||||||||||||
Operating income | ||||||||||||
Less: | ||||||||||||
Other expense (income) (Note 5) | ( | ) | ( | ) | ||||||||
Other components of net periodic benefit recovery (Note 13) | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Net interest expense | ||||||||||||
Income before income tax expense | ||||||||||||
Income tax expense (Note 6) | ||||||||||||
Net income | $ | $ | $ | $ | ||||||||
Earnings per share (Note 7) | ||||||||||||
Basic earnings per share | $ | $ | $ | $ | ||||||||
Diluted earnings per share | $ | $ | $ | $ | ||||||||
Weighted-average number of shares (millions) (Note 7) | ||||||||||||
Basic | ||||||||||||
Diluted | ||||||||||||
Dividends declared per share | $ | $ | $ | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
Net income | $ | $ | $ | $ | ||||||||
Net (loss) gain in foreign currency translation adjustments, net of hedging activities | ( | ) | ( | ) | ||||||||
Change in derivatives designated as cash flow hedges | ||||||||||||
Change in pension and post-retirement defined benefit plans | ||||||||||||
Other comprehensive income before income taxes | ||||||||||||
Income tax recovery (expense) on above items | ( | ) | ( | ) | ( | ) | ||||||
Other comprehensive income (Note 4) | ||||||||||||
Comprehensive income | $ | $ | $ | $ |
September 30 | December 31 | |||||
(in millions of Canadian dollars) | 2019 | 2018 | ||||
Assets | ||||||
Current assets | ||||||
Cash and cash equivalents | $ | $ | ||||
Accounts receivable, net | ||||||
Materials and supplies | ||||||
Other current assets | ||||||
Investments | ||||||
Properties (Note 9) | ||||||
Goodwill and intangible assets | ||||||
Pension asset | ||||||
Other assets (Note 9) | ||||||
Total assets | $ | $ | ||||
Liabilities and shareholders’ equity | ||||||
Current liabilities | ||||||
Accounts payable and accrued liabilities (Note 9) | $ | $ | ||||
Long-term debt maturing within one year (Note 8, 9, 11) | ||||||
Pension and other benefit liabilities | ||||||
Other long-term liabilities (Note 9) | ||||||
Long-term debt (Note 8, 9, 11) | ||||||
Deferred income taxes | ||||||
Total liabilities | ||||||
Shareholders’ equity | ||||||
Share capital | ||||||
Additional paid-in capital | ||||||
Accumulated other comprehensive loss (Note 4) | ( | ) | ( | ) | ||
Retained earnings | ||||||
Total liabilities and shareholders’ equity | $ | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
Operating activities | ||||||||||||
Net income | $ | $ | $ | $ | ||||||||
Reconciliation of net income to cash provided by operating activities: | ||||||||||||
Depreciation and amortization | ||||||||||||
Deferred income tax expense (Note 6) | ||||||||||||
Pension recovery and funding (Note 13) | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Foreign exchange loss (gain) on debt and lease liabilities (Note 5) | ( | ) | ( | ) | ||||||||
Settlement of forward starting swaps on debt issuance (Note 11) | ( | ) | ||||||||||
Other operating activities, net | ( | ) | ( | ) | ||||||||
Change in non-cash working capital balances related to operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Cash provided by operating activities | ||||||||||||
Investing activities | ||||||||||||
Additions to properties | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Proceeds from sale of properties and other assets | ||||||||||||
Other | ( | ) | ( | ) | ( | ) | ||||||
Cash used in investing activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Financing activities | ||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Issuance of CP Common Shares | ||||||||||||
Purchase of CP Common Shares (Note 10) | ( | ) | ( | ) | ( | ) | ||||||
Issuance of long-term debt, excluding commercial paper (Note 8) | ||||||||||||
Repayment of long-term debt, excluding commercial paper (Note 8) | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Net issuance (repayment) of commercial paper (Note 8) | ( | ) | ||||||||||
Other | ( | ) | ( | ) | ||||||||
Cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | ( | ) | ( | ) | ||||||||
Cash position | ||||||||||||
Increase (decrease) in cash and cash equivalents | ( | ) | ||||||||||
Cash and cash equivalents at beginning of period | ||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | ||||||||
Supplemental disclosures of cash flow information: | ||||||||||||
Income taxes paid | $ | $ | $ | $ | ||||||||
Interest paid | $ | $ | $ | $ |
For the three months ended September 30 | |||||||||||||||||||
(in millions of Canadian dollars except per share data) | Common shares (in millions) | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders’ equity | |||||||||||||
Balance at July 1, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Net income | — | ||||||||||||||||||
Other comprehensive income (Note 4) | — | ||||||||||||||||||
Dividends declared ($0.8300 per share) | — | ( | ) | ( | ) | ||||||||||||||
Effect of stock-based compensation expense | — | ||||||||||||||||||
CP Common Shares repurchased (Note 10) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Shares issued under stock option plan | ( | ) | |||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Balance at July 1, 2018 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Net income | — | ||||||||||||||||||
Other comprehensive income (Note 4) | — | ||||||||||||||||||
Dividends declared ($0.6500 per share) | — | ( | ) | ( | ) | ||||||||||||||
Effect of stock-based compensation expense | — | ||||||||||||||||||
Shares issued under stock option plan | |||||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | ( | ) | $ | $ |
For the nine months ended September 30 | |||||||||||||||||||
(in millions of Canadian dollars except per share data) | Common shares (in millions) | Share capital | Additional paid-in capital | Accumulated other comprehensive loss | Retained earnings | Total shareholders’ equity | |||||||||||||
Balance at December 31, 2018, as previously reported | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Impact of accounting change (Note 2) | — | ( | ) | ( | ) | ||||||||||||||
Balance at January 1, 2019, as restated | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Net income | — | ||||||||||||||||||
Other comprehensive income (Note 4) | — | ||||||||||||||||||
Dividends declared ($2.3100 per share) | — | ( | ) | ( | ) | ||||||||||||||
Effect of stock-based compensation expense | — | ||||||||||||||||||
CP Common Shares repurchased (Note 10) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Shares issued under stock option plan | ( | ) | |||||||||||||||||
Balance at September 30, 2019 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Balance at January 1, 2018 | $ | $ | $ | ( | ) | $ | $ | ||||||||||||
Net income | — | ||||||||||||||||||
Other comprehensive income (Note 4) | — | ||||||||||||||||||
Dividends declared ($1.8625 per share) | — | ( | ) | ( | ) | ||||||||||||||
Effect of stock-based compensation expense | — | ||||||||||||||||||
CP Common Shares repurchased (Note 10) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||
Shares issued under stock option plan | ( | ) | |||||||||||||||||
Balance at September 30, 2018 | $ | $ | $ | ( | ) | $ | $ |
• | Acceptance of the package of practical expedients, permitting the Company not to reassess lease existence, classification, and capitalization of initial direct costs previously determined for all leases under Topic 840, Leases; |
• | Acceptance of the previous accounting treatment for land easements where Topic 840 was not applied; and |
• | Use of hindsight at transition to determine lease term length. |
(in millions of Canadian dollars) | As reported December 31, 2018 | New lease standard cumulative-effect | As restated January 1, 2019 | ||||||
Assets | |||||||||
Properties | $ | $ | ( | ) | $ | ||||
Other assets | |||||||||
Liabilities | |||||||||
Accounts payable and accrued liabilities | $ | $ | $ | ||||||
Other long-term liabilities | |||||||||
Deferred income taxes | ( | ) | |||||||
Shareholders' equity | |||||||||
Retained earnings | $ | $ | ( | ) | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
Freight | ||||||||||||
Grain | $ | $ | $ | $ | ||||||||
Coal | ||||||||||||
Potash | ||||||||||||
Fertilizers and sulphur | ||||||||||||
Forest products | ||||||||||||
Energy, chemicals and plastics | ||||||||||||
Metals, minerals and consumer products | ||||||||||||
Automotive | ||||||||||||
Intermodal | ||||||||||||
Total freight revenues | ||||||||||||
Non-freight excluding leasing revenues | ||||||||||||
Revenues from contracts with customers | ||||||||||||
Leasing revenues | ||||||||||||
Total revenues | $ | $ | $ | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
Opening balance | $ | $ | $ | $ | ||||||||
Revenue recognized that was included in the contract liability balance at the beginning of the period | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Increases due to consideration received, excluding amounts recognized as revenue during the period | ||||||||||||
Closing balance | $ | $ | $ | $ |
For the three months ended September 30 | ||||||||||||
(in millions of Canadian dollars) | Foreign currency net of hedging activities(1) | Derivatives and other(1) | Pension and post- retirement defined benefit plans(1) | Total(1) | ||||||||
Opening balance, July 1, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income before reclassifications | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||
Net other comprehensive income | ||||||||||||
Closing balance, September 30, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Opening balance, July 1, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive (loss) income before reclassifications | ( | ) | ( | ) | ( | ) | ||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||
Net other comprehensive (loss) income | ( | ) | ||||||||||
Closing balance, September 30, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
For the nine months ended September 30 | ||||||||||||
(in millions of Canadian dollars) | Foreign currency net of hedging activities(1) | Derivatives and other(1) | Pension and post- retirement defined benefit plans(1) | Total(1) | ||||||||
Opening balance, January 1, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive loss before reclassifications | ( | ) | ( | ) | ||||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||
Net other comprehensive income | ||||||||||||
Closing balance, September 30, 2019 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Opening balance, January 1, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||
Other comprehensive income before reclassifications | ||||||||||||
Amounts reclassified from accumulated other comprehensive loss | ||||||||||||
Net other comprehensive income | ||||||||||||
Closing balance, September 30, 2018 | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
Amortization of prior service costs(1) | $ | ( | ) | $ | ( | ) | $ | $ | ( | ) | ||
Recognition of net actuarial loss(1) | ||||||||||||
Total before income tax | ||||||||||||
Income tax recovery | ( | ) | ( | ) | ( | ) | ( | ) | ||||
Total net of income tax | $ | $ | $ | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
Foreign exchange loss (gain) on debt and lease liabilities | $ | $ | ( | ) | $ | ( | ) | $ | ||||
Other foreign exchange losses (gains) | ( | ) | ( | ) | ||||||||
Other | ( | ) | ( | ) | ||||||||
Other expense (income) | $ | $ | ( | ) | $ | ( | ) | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | ||||||||
Current income tax expense | $ | $ | $ | $ | ||||||||
Deferred income tax expense | ||||||||||||
Income tax expense | $ | $ | $ | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | ||||
Weighted-average basic shares outstanding | ||||||||
Dilutive effect of stock options | ||||||||
Weighted-average diluted shares outstanding |
For the three months ended September 30 | For the nine months ended September 30 | |||||
(in millions of Canadian dollars) | 2019 | 2019 | ||||
Operating lease cost | $ | $ | ||||
Short-term lease cost | ||||||
Variable lease cost | ||||||
Sublease income | ( | ) | ( | ) | ||
Finance Lease Cost | ||||||
Amortization of right-of use-assets | ||||||
Interest on lease liabilities | ||||||
Total lease costs | $ | $ |
As at September 30 | ||||
(in millions of Canadian dollars) | Classification | 2019 | ||
Assets | ||||
Operating | Other assets | $ | ||
Finance | Properties, net book value | |||
Liabilities | ||||
Current | ||||
Operating | Accounts payable and accrued liabilities | |||
Finance | Long-term debt maturing within one year | |||
Long-term | ||||
Operating | Other long-term liabilities | |||
Finance | Long-term debt |
As at September 30 | ||
(in millions of Canadian dollars) | 2019 | |
Weighted Average Remaining Lease Term | ||
Operating leases | ||
Finance leases | ||
Weighted Average Discount Rate | ||
Operating leases | % | |
Finance leases | % |
For the three months ended September 30 | For the nine months ended September 30 | |||||
(in millions of Canadian dollars) | 2019 | 2019 | ||||
Cash paid for amounts included in measurement of lease liabilities | ||||||
Operating cash outflows from operating leases | $ | $ | ||||
Operating cash outflows from finance leases | ||||||
Financing cash outflows from finance leases | ||||||
Right-of-use assets obtained in exchange for lease liabilities | ||||||
Operating leases | $ | $ | ||||
Finance leases |
As at September 30, 2019 | ||||||
(in millions of Canadian dollars) | Finance Leases | Operating Leases | ||||
2019 | $ | $ | ||||
2020 | ||||||
2021 | ||||||
2022 | ||||||
2023 | ||||||
Thereafter | ||||||
Total lease payments | $ | $ | ||||
Less: Imputed interest | ||||||
Present value of lease payments | $ | $ |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||
Number of Common Shares repurchased(1) | ||||||||||||
Weighted-average price per share(2) | $ | $ | $ | $ | ||||||||
Amount of repurchase (in millions)(2) | $ | $ | $ | $ |
(in millions of Canadian dollars) | September 30, 2019 | December 31, 2018 | ||||
Long-term debt (including current maturities): | ||||||
Fair value | $ | $ | ||||
Carrying value |
For the nine months ended September 30, 2019 | |
Grant price | $ |
Expected option life (years)(1) | |
Risk-free interest rate(2) | |
Expected stock price volatility(3) | |
Expected annual dividends per share(4) | $ |
Expected forfeiture rate(5) | |
Weighted-average grant date fair value per option granted during the period | $ |
(1) | Represents the period of time that awards are expected to be outstanding. Historical data on exercise behaviour or, when available, specific expectations regarding future exercise behaviour were used to estimate the expected life of the option. |
(2) | Based on the implied yield available on zero-coupon government issues with an equivalent term commensurate with the expected term of the option. |
(3) | Based on the historical volatility of the Company’s stock price over a period commensurate with the expected term of the option. |
(4) | Determined by the current annual dividend at the time of grant. The Company does not employ different dividend yields throughout the contractual term of the option. On May 6, 2019, the Company announced an increase in its quarterly dividend to $ |
(5) | The Company estimates forfeitures based on past experience. This rate is monitored on a periodic basis. |
For the three months ended September 30 | |||||||||||||
Pensions | Other benefits | ||||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||
Current service cost (benefits earned by employees) | $ | $ | $ | $ | |||||||||
Other components of net periodic benefit (recovery) cost: | |||||||||||||
Interest cost on benefit obligation | |||||||||||||
Expected return on fund assets | ( | ) | ( | ) | |||||||||
Recognized net actuarial loss | |||||||||||||
Amortization of prior service costs | ( | ) | ( | ) | |||||||||
Total other components of net periodic benefit (recovery) cost | ( | ) | ( | ) | |||||||||
Net periodic benefit (recovery) cost | $ | ( | ) | $ | ( | ) | $ | $ |
For the nine months ended September 30 | |||||||||||||
Pensions | Other benefits | ||||||||||||
(in millions of Canadian dollars) | 2019 | 2018 | 2019 | 2018 | |||||||||
Current service cost (benefits earned by employees) | $ | $ | $ | $ | |||||||||
Other components of net periodic benefit (recovery) cost: | |||||||||||||
Interest cost on benefit obligation | |||||||||||||
Expected return on fund assets | ( | ) | ( | ) | |||||||||
Recognized net actuarial loss | |||||||||||||
Amortization of prior service costs | ( | ) | ( | ) | |||||||||
Total other components of net periodic benefit (recovery) cost | ( | ) | ( | ) | |||||||||
Net periodic benefit (recovery) cost | $ | ( | ) | $ | ( | ) | $ | $ |
(1) | Québec's Minister of Sustainable Development, Environment, Wildlife and Parks ordered various parties, including CP, to clean up the derailment site and served CP with a Notice of Claim for $ |
(2) | The AGQ sued CP in the Québec Superior Court claiming $ |
(3) | A class action in the Québec Superior Court on behalf of persons and entities residing in, owning or leasing property in, operating a business in, or physically present in Lac-Mégantic at the time of the derailment (the “Class Action”) was certified against CP, MMAC and the train conductor, Mr. Thomas Harding ("Harding") in May 2015. The Class Action seeks unquantified damages, including for wrongful death, personal injury, and property damage. |
(4) |
(5) |
(6) | The MMAR U.S. estate representative commenced an action against CP in November 2014 in the Maine Bankruptcy Court claiming that CP failed to abide by certain regulations and seeking damages for MMAR’s loss in business value (as yet unquantified). This action asserts that CP knew or ought to have known that the shipper misclassified the petroleum crude oil and therefore should have refused to transport it. |
(7) | The class and mass tort action commenced against CP in June 2015 in Texas (on behalf of Lac-Mégantic residents and wrongful death representatives) and the wrongful death and personal injury actions commenced against CP in June 2015 in Illinois and Maine, were all transferred and consolidated in Federal District Court in Maine (the “Maine Actions”). The Maine Actions allege that CP negligently misclassified and mis-packaged the petroleum crude oil. On CP’s motion, the Maine Actions were dismissed. The plaintiffs are appealing the dismissal decision. |
(8) | The trustee for the wrongful death trust commenced Carmack Amendment claims against CP in North Dakota Federal Court, seeking to recover approximately $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Revenues | |||||||||||||||
Freight | $ | $ | $ | $ | $ | ||||||||||
Non-freight | ( | ) | |||||||||||||
Total revenues | ( | ) | |||||||||||||
Operating expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Fuel | |||||||||||||||
Materials | |||||||||||||||
Equipment rents | ( | ) | |||||||||||||
Depreciation and amortization | |||||||||||||||
Purchased services and other | ( | ) | |||||||||||||
Total operating expenses | ( | ) | |||||||||||||
Operating income | |||||||||||||||
Less: | |||||||||||||||
Other expense (income) | ( | ) | |||||||||||||
Other components of net periodic benefit (recovery) expense | ( | ) | ( | ) | |||||||||||
Net interest expense (income) | ( | ) | |||||||||||||
(Loss) income before income tax expense and equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Less: Income tax expense | |||||||||||||||
Add: Equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Revenues | |||||||||||||||
Freight | $ | $ | $ | $ | $ | ||||||||||
Non-freight | ( | ) | |||||||||||||
Total revenues | ( | ) | |||||||||||||
Operating expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Fuel | |||||||||||||||
Materials | |||||||||||||||
Equipment rents | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Purchased services and other | ( | ) | |||||||||||||
Total operating expenses | ( | ) | |||||||||||||
Operating income | |||||||||||||||
Less: | |||||||||||||||
Other (income) expense | ( | ) | ( | ) | ( | ) | |||||||||
Other components of net periodic benefit (recovery) expense | ( | ) | ( | ) | |||||||||||
Net interest (income) expense | ( | ) | ( | ) | |||||||||||
Income before income tax expense and equity in net earnings of subsidiaries | |||||||||||||||
Less: Income tax (recovery) expense | ( | ) | |||||||||||||
Add: Equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Revenues | |||||||||||||||
Freight | $ | $ | $ | $ | $ | ||||||||||
Non-freight | ( | ) | |||||||||||||
Total revenues | ( | ) | |||||||||||||
Operating expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Fuel | |||||||||||||||
Materials | |||||||||||||||
Equipment rents | ( | ) | |||||||||||||
Depreciation and amortization | |||||||||||||||
Purchased services and other | ( | ) | |||||||||||||
Total operating expenses | ( | ) | |||||||||||||
Operating income | |||||||||||||||
Less: | |||||||||||||||
Other (income) expense | ( | ) | ( | ) | ( | ) | |||||||||
Other components of net periodic benefit (recovery) expense | ( | ) | ( | ) | |||||||||||
Net interest (income) expense | ( | ) | ( | ) | |||||||||||
Income before income tax expense and equity in net earnings of subsidiaries | |||||||||||||||
Less: Income tax expense | |||||||||||||||
Add: Equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Revenues | |||||||||||||||
Freight | $ | $ | $ | $ | $ | ||||||||||
Non-freight | ( | ) | |||||||||||||
Total revenues | ( | ) | |||||||||||||
Operating expenses | |||||||||||||||
Compensation and benefits | |||||||||||||||
Fuel | |||||||||||||||
Materials | |||||||||||||||
Equipment rents | |||||||||||||||
Depreciation and amortization | |||||||||||||||
Purchased services and other | ( | ) | |||||||||||||
Total operating expenses | ( | ) | |||||||||||||
Operating income | |||||||||||||||
Less: | |||||||||||||||
Other expense (income) | ( | ) | |||||||||||||
Other components of net periodic benefit (recovery) expense | ( | ) | ( | ) | |||||||||||
Net interest expense (income) | ( | ) | |||||||||||||
(Loss) income before income tax expense and equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Less: Income tax (recovery) expense | ( | ) | |||||||||||||
Add: Equity in net earnings of subsidiaries | ( | ) | |||||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
Net (loss) gain in foreign currency translation adjustments, net of hedging activities | ( | ) | ( | ) | |||||||||||
Change in derivatives designated as cash flow hedges | |||||||||||||||
Change in pension and post-retirement defined benefit plans | |||||||||||||||
Other comprehensive (loss) income before income taxes | ( | ) | |||||||||||||
Income tax recovery on above items | |||||||||||||||
Equity accounted investments | ( | ) | |||||||||||||
Other comprehensive income | ( | ) | |||||||||||||
Comprehensive income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | ( | ) | |||||||||||||
Change in derivatives designated as cash flow hedges | |||||||||||||||
Change in pension and post-retirement defined benefit plans | |||||||||||||||
Other comprehensive income (loss) before income taxes | ( | ) | |||||||||||||
Income tax expense on above items | ( | ) | ( | ) | |||||||||||
Equity accounted investments | ( | ) | |||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||
Comprehensive income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
Net gain (loss) in foreign currency translation adjustments, net of hedging activities | ( | ) | |||||||||||||
Change in derivatives designated as cash flow hedges | |||||||||||||||
Change in pension and post-retirement defined benefit plans | |||||||||||||||
Other comprehensive income (loss) before income taxes | ( | ) | |||||||||||||
Income tax expense on above items | ( | ) | ( | ) | |||||||||||
Equity accounted investments | ( | ) | |||||||||||||
Other comprehensive income (loss) | ( | ) | |||||||||||||
Comprehensive income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Net income | $ | $ | $ | $ | ( | ) | $ | ||||||||
Net (loss) gain in foreign currency translation adjustments, net of hedging activities | ( | ) | ( | ) | |||||||||||
Change in derivatives designated as cash flow hedges | |||||||||||||||
Change in pension and post-retirement defined benefit plans | |||||||||||||||
Other comprehensive (loss) income before income taxes | ( | ) | |||||||||||||
Income tax expense on above items | ( | ) | ( | ) | ( | ) | |||||||||
Equity accounted investments | ( | ) | |||||||||||||
Other comprehensive income | ( | ) | |||||||||||||
Comprehensive income | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Assets | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||
Accounts receivable, net | |||||||||||||||
Accounts receivable, intercompany | ( | ) | |||||||||||||
Short-term advances to affiliates | ( | ) | |||||||||||||
Materials and supplies | |||||||||||||||
Other current assets | |||||||||||||||
( | ) | ||||||||||||||
Long-term advances to affiliates | ( | ) | |||||||||||||
Investments | |||||||||||||||
Investments in subsidiaries | ( | ) | |||||||||||||
Properties | |||||||||||||||
Goodwill and intangible assets | |||||||||||||||
Pension asset | |||||||||||||||
Other assets | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | ||||||||
Liabilities and shareholders’ equity | |||||||||||||||
Current liabilities | |||||||||||||||
Accounts payable and accrued liabilities | $ | $ | $ | $ | $ | ||||||||||
Accounts payable, intercompany | ( | ) | |||||||||||||
Short-term advances from affiliates | ( | ) | |||||||||||||
Long-term debt maturing within one year | |||||||||||||||
( | ) | ||||||||||||||
Pension and other benefit liabilities | |||||||||||||||
Long-term advances from affiliates | ( | ) | |||||||||||||
Other long-term liabilities | |||||||||||||||
Long-term debt | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total liabilities | ( | ) | |||||||||||||
Shareholders’ equity | |||||||||||||||
Share capital | ( | ) | |||||||||||||
Additional paid-in capital | ( | ) | |||||||||||||
Accumulated other comprehensive (loss) income | ( | ) | ( | ) | ( | ) | |||||||||
Retained earnings | ( | ) | |||||||||||||
( | ) | ||||||||||||||
Total liabilities and shareholders’ equity | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Assets | |||||||||||||||
Current assets | |||||||||||||||
Cash and cash equivalents | $ | $ | $ | $ | $ | ||||||||||
Accounts receivable, net | |||||||||||||||
Accounts receivable, intercompany | ( | ) | |||||||||||||
Short-term advances to affiliates | ( | ) | |||||||||||||
Materials and supplies | |||||||||||||||
Other current assets | |||||||||||||||
( | ) | ||||||||||||||
Long-term advances to affiliates | ( | ) | |||||||||||||
Investments | |||||||||||||||
Investments in subsidiaries | ( | ) | |||||||||||||
Properties | |||||||||||||||
Goodwill and intangible assets | |||||||||||||||
Pension asset | |||||||||||||||
Other assets | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total assets | $ | $ | $ | $ | ( | ) | $ | ||||||||
Liabilities and shareholders’ equity | |||||||||||||||
Current liabilities | |||||||||||||||
Accounts payable and accrued liabilities | $ | $ | $ | $ | $ | ||||||||||
Accounts payable, intercompany | ( | ) | |||||||||||||
Short-term advances from affiliates | ( | ) | |||||||||||||
Long-term debt maturing within one year | |||||||||||||||
( | ) | ||||||||||||||
Pension and other benefit liabilities | |||||||||||||||
Long-term advances from affiliates | ( | ) | |||||||||||||
Other long-term liabilities | |||||||||||||||
Long-term debt | |||||||||||||||
Deferred income taxes | ( | ) | |||||||||||||
Total liabilities | ( | ) | |||||||||||||
Shareholders’ equity | |||||||||||||||
Share capital | ( | ) | |||||||||||||
Additional paid-in capital | ( | ) | |||||||||||||
Accumulated other comprehensive (loss) income | ( | ) | ( | ) | ( | ) | |||||||||
Retained earnings | ( | ) | |||||||||||||
( | ) | ||||||||||||||
Total liabilities and shareholders’ equity | $ | $ | $ | $ | ( | ) | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Cash provided by operating activities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Investing activities | |||||||||||||||
Additions to properties | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from sale of properties and other assets | |||||||||||||||
Advances to affiliates | ( | ) | |||||||||||||
Repayment of advances to affiliates | ( | ) | |||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Cash used in investing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Financing activities | |||||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Issuance of CP Common Shares | |||||||||||||||
Purchase of CP Common Shares | ( | ) | ( | ) | ( | ) | |||||||||
Repayment of long-term debt, excluding commercial paper | ( | ) | ( | ) | |||||||||||
Net issuance of commercial paper | |||||||||||||||
Advances from affiliates | ( | ) | |||||||||||||
Repayment of advances from affiliates | ( | ) | |||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | |||||||||||||||
Cash position | |||||||||||||||
Increase in cash and cash equivalents | |||||||||||||||
Cash and cash equivalents at beginning of period | |||||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Cash provided by operating activities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Investing activities | |||||||||||||||
Additions to properties | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from sale of properties and other assets | |||||||||||||||
Advances to affiliates | ( | ) | |||||||||||||
Repayment of advances to affiliates | ( | ) | |||||||||||||
Repurchase of share capital from affiliates | ( | ) | |||||||||||||
Cash provided by (used in) investing activities | ( | ) | ( | ) | |||||||||||
Financing activities | |||||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Return of share capital to affiliates | ( | ) | ( | ) | |||||||||||
Issuance of CP Common Shares | |||||||||||||||
Repayment of long-term debt, excluding commercial paper | ( | ) | ( | ) | |||||||||||
Net repayment of commercial paper | ( | ) | ( | ) | |||||||||||
Advances from affiliates | ( | ) | |||||||||||||
Repayment of advances from affiliates | ( | ) | ( | ) | |||||||||||
Cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | ( | ) | ( | ) | |||||||||||
Cash position | |||||||||||||||
Increase in cash and cash equivalents | |||||||||||||||
Cash and cash equivalents at beginning of period | |||||||||||||||
Cash and cash equivalents at end of period | $ | $ | $ | $ | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Cash provided by operating activities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Investing activities | |||||||||||||||
Additions to properties | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from sale of properties and other assets | |||||||||||||||
Advances to affiliates | ( | ) | ( | ) | |||||||||||
Repayment of advances to affiliates | ( | ) | |||||||||||||
Capital contributions to affiliates | ( | ) | |||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Cash used in investing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Financing activities | |||||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Issuance of share capital | ( | ) | |||||||||||||
Issuance of CP Common Shares | |||||||||||||||
Purchase of CP Common Shares | ( | ) | ( | ) | ( | ) | |||||||||
Issuance of long-term debt, excluding commercial paper | |||||||||||||||
Repayment of long-term debt, excluding commercial paper | ( | ) | ( | ) | |||||||||||
Net issuance of commercial paper | |||||||||||||||
Advances from affiliates | ( | ) | |||||||||||||
Repayment of advances from affiliates | ( | ) | ( | ) | |||||||||||
Other | ( | ) | ( | ) | |||||||||||
Cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | ( | ) | ( | ) | |||||||||||
Cash position | |||||||||||||||
Increase in cash and cash equivalents | |||||||||||||||
Cash and cash equivalents at beginning of year | |||||||||||||||
Cash and cash equivalents at end of year | $ | $ | $ | $ | $ |
(in millions of Canadian dollars) | CPRL (Parent Guarantor) | CPRC (Subsidiary Issuer) | Non-Guarantor Subsidiaries | Consolidating Adjustments and Eliminations | CPRL Consolidated | ||||||||||
Cash provided by operating activities | $ | $ | $ | $ | ( | ) | $ | ||||||||
Investing activities | |||||||||||||||
Additions to properties | ( | ) | ( | ) | ( | ) | |||||||||
Proceeds from sale of properties and other assets | |||||||||||||||
Advances to affiliates | ( | ) | ( | ) | |||||||||||
Repayment of advances to affiliates | ( | ) | |||||||||||||
Repurchase of share capital from affiliates | ( | ) | |||||||||||||
Other | ( | ) | ( | ) | |||||||||||
Cash provided by (used in) investing activities | ( | ) | ( | ) | |||||||||||
Financing activities | |||||||||||||||
Dividends paid | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Return of share capital to affiliates | ( | ) | ( | ) | |||||||||||
Issuance of CP Common Shares | |||||||||||||||
Purchase of CP Common Shares | ( | ) | ( | ) | |||||||||||
Issuance of long-term debt, excluding commercial paper | |||||||||||||||
Repayment of long-term debt, excluding commercial paper | ( | ) | ( | ) | |||||||||||
Advances from affiliates | ( | ) | |||||||||||||
Repayment of advances from affiliates | ( | ) | ( | ) | |||||||||||
Cash used in financing activities | ( | ) | ( | ) | ( | ) | ( | ) | |||||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | ( | ) | |||||||||||||
Cash position | |||||||||||||||
Decrease in cash and cash equivalents | ( | ) | ( | ) | ( | ) | |||||||||
Cash and cash equivalents at beginning of year | |||||||||||||||
Cash and cash equivalents at end of year | $ | $ | $ | $ | $ |
• | Financial performance - In the third quarter of 2019, CP reported Diluted earnings per share ("EPS") of $4.46, an increase of 3% as compared to the same period of 2018, primarily due to growth in operating income and lower average outstanding shares due to the Company's share repurchase program, partially offset by foreign exchange ("FX") translation losses on debt and lease liabilities in 2019 compared to FX translation gains on debt in 2018. Adjusted diluted EPS, which excludes the FX translation losses and gains on debt and lease liabilities, was $4.61 in the third quarter of 2019, an increase of 12% compared to the same period of 2018. This increase was primarily due to higher operating income and lower average outstanding shares. |
• | Total revenues - Total revenues increased by 4% in the third quarter of 2019 to $1,979 million from $1,898 million in the same period of 2018. This increase was primarily driven by higher freight rates, partially offset by lower volumes. |
• | Operating performance - CP's average train speed increased by 5% in the third quarter of 2019, to 22.7 miles per hour, due to completion of network infrastructure projects in 2018. Average train weight remained relatively unchanged at 9,173 tons and average train length increased by 1% to 7,446 feet due to improvements in operating plan efficiency, in each case compared to the same period in 2018. These metrics are discussed further in Performance Indicators of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | At the end of September 2019, Mr. Robert Johnson retired from his position as Executive Vice-President, Operations. Effective September 1, 2019, CP's new Executive Vice-President, Operations, is Mr. Mark Redd. |
• | On July 15, 2019, the Company announced the appointment of Ms. Andrea Robertson and Mr. Edward R. Hamberger to CP’s Board of Directors, effective July 15, 2019. |
• | On May 7, 2019, CP announced the election of all nine director nominees and, upon her re-election as a director, Ms. Isabelle Courville was confirmed as Chair of CP's Board of Directors. |
• | On May 6, 2019, CP announced an increase to the Company's quarterly dividend to $0.8300 per share from $0.6500 per share. |
• | During the first quarter of 2019, the Company experienced severe winter operating conditions and an increase in the frequency and severity of casualty incidents and derailments. As a result, the Company incurred significant costs for weather fighting, direct casualty costs, and higher operating costs. During this period and the subsequent network recovery the Company also experienced losses and deferrals of potential revenues. |
• | During the second quarter of 2018, the Company received multiple strike notices from the Teamsters Canada Rail Conference - Train & Engine ("TCRC"), representing approximately 3,000 conductors and locomotive engineers, and the International Brotherhood of Electrical Workers ("IBEW"), representing approximately 360 signal maintainers. CP reached a three-year agreement with IBEW, ratified by IBEW membership on June 29, 2018, and a four-year agreement with TCRC, ratified by TCRC membership on July 20, 2018. The wind-down of operations and return to full service levels following the strike notices caused disruption to the network, losses in potential revenue and costs related to labour disruptions. |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
2019 | 2018(1) | % Change | 2019 | 2018(1) | % Change | |||||||
Operations Performance | ||||||||||||
Gross ton-miles (“GTMs”) (millions) | 71,658 | 70,469 | 2 | 209,229 | 202,575 | 3 | ||||||
Train miles (thousands) | 8,354 | 8,174 | 2 | 24,550 | 23,809 | 3 | ||||||
Average train weight – excluding local traffic (tons) | 9,173 | 9,195 | — | 9,117 | 9,082 | — | ||||||
Average train length – excluding local traffic (feet) | 7,446 | 7,345 | 1 | 7,382 | 7,297 | 1 | ||||||
Average terminal dwell (hours) | 5.8 | 6.9 | (16 | ) | 6.7 | 7.1 | (6 | ) | ||||
Average train speed (miles per hour, or "mph") | 22.7 | 21.6 | 5 | 22.1 | 21.2 | 4 | ||||||
Fuel efficiency (U.S. gallons of locomotive fuel consumed / 1,000 GTMs) | 0.927 | 0.916 | 1 | 0.956 | 0.952 | — | ||||||
Total Employees and Workforce | ||||||||||||
Total employees (average) | 13,203 | 12,941 | 2 | 13,107 | 12,623 | 4 | ||||||
Total employees (end of period) | 13,104 | 13,000 | 1 | 13,104 | 13,000 | 1 | ||||||
Workforce (end of period) | 13,134 | 13,029 | 1 | 13,134 | 13,029 | 1 | ||||||
Safety Indicators | ||||||||||||
FRA personal injuries per 200,000 employee-hours | 1.39 | 1.47 | (5 | ) | 1.44 | 1.48 | (3 | ) | ||||
FRA train accidents per million train-miles | 1.10 | 1.57 | (30 | ) | 1.19 | 1.26 | (6 | ) |
(1) | Certain figures have been updated to reflect new information or have been revised to conform with current presentation. |
• | A GTM is defined as the movement of one ton of train weight over one mile. GTMs are calculated by multiplying total train weight by the distance the train moved. Total train weight comprises the weight of the freight cars, their contents, and any inactive locomotives. An increase in GTMs indicates additional workload. GTMs increased by 2% in the third quarter of 2019 compared to the same period of 2018. This increase was mainly attributable to higher volumes of international intermodal and crude. This increase was partially offset by lower volumes of Potash. |
• | Train miles are defined as the sum of the distance moved by all trains operated on the network. Train miles increased by 2% in the third quarter of 2019 compared to the same period of 2018. This increase reflected the impact of a 2% increase in workload (GTMs). |
• | Average train weight is defined as the average gross weight of CP trains, both loaded and empty. This excludes trains in short-haul service, work trains used to move CP’s track equipment and materials, and the haulage of other railroads’ trains on CP’s network. Average train weight remained relatively flat in the third quarter of 2019 compared to the same period of 2018. |
• | Average train length is defined as the average total length of CP trains, both loaded and empty. This includes all cars and locomotives on the train and is calculated as the sum of each car or locomotive's length multiplied by the distance travelled, divided by train miles. Local trains are excluded from this measure. Average train length increased by 1% in the third quarter of 2019 compared to the same period of 2018. This increase was a result of improvements in operating plan efficiency. |
• | Average terminal dwell is defined as the average time a freight car resides within terminal boundaries expressed in hours. The timing starts with a train arriving at the terminal, a customer releasing the car to the Company, or a car arriving at interchange from another railroad. The timing ends when the train leaves, a customer receives the car from CP, or the freight car is transferred to another railroad. Freight cars are excluded if they are being stored at the terminal or used in track repairs. Average terminal dwell improved by 16% in the third quarter of 2019 compared to the same period of 2018. This favourable decrease was due to improved network fluidity. |
• | Average train speed is defined as a measure of the line-haul movement from origin to destination including terminal dwell hours. It is calculated by dividing the total train miles travelled by the total train hours operated. This calculation does not include delay time related to customers or foreign railroads and excludes the time and distance travelled by: i) trains used in or around CP’s yards; ii) passenger trains; and iii) trains used for repairing track. Average train speed increased by 5% in the third quarter of 2019 compared to the same period of 2018. This increase in speed was due to completion of network infrastructure projects in 2018. |
• | Fuel efficiency is defined as U.S. gallons of locomotive fuel consumed per 1,000 GTMs. Fuel consumed includes gallons from freight, yard and commuter service but excludes fuel used in capital projects and other non-freight activities. Fuel efficiency decreased by 1% in the third quarter of 2019 compared to the same period of 2018. This decrease in efficiency was due to reduced train productivity and lower horsepower utilization. |
• | GTMs increased by 3% for the first nine months of 2019 compared to the same period of 2018. This increase was primarily due to increased volumes of Intermodal, Energy, chemicals and plastics, Canadian grain, and Potash. This increase was partially offset by decreased volumes of frac sand and U.S. grain. |
• | Train miles increased by 3% for the first nine months of 2019 compared to the same period of 2018. This increase reflected the impact of a 3% increase in workload (GTMs). |
• | Average train weight increased by 35 tons for the first nine months of 2019 compared to the same period of 2018. This slight increase was a result of improvements in operating plan efficiency combined with higher volumes of heavier commodities, such as Potash and crude. This slight increase was partially offset by the implementation of CP's winter contingency plan in the first quarter of 2019 resulting in shorter and lighter trains within the operating plan. |
• | Average train length increased by 1% for the first nine months of 2019 from the same period of 2018. This increase was primarily due to improvements in operating plan efficiency and increased Potash and Intermodal volumes, which move in longer trains. This increase was partially offset by the implementation of CP's winter contingency plan in the first quarter of 2019 resulting in shorter and lighter trains within the operating plan. |
• | Average terminal dwell decreased by 6% in the first nine months of 2019 compared to the same period of 2018. This favourable decrease was due to improved network fluidity. |
• | Average train speed increased by 4% in the first nine months of 2019 compared to the same period of 2018. This increase was primarily due to the completion of network infrastructure projects in 2018, partially offset by the impact of harsh winter operating conditions and network disruptions in the first quarter of 2019. |
• | Fuel efficiency was unchanged in the first nine months of 2019 compared to the same period of 2018. Improvements in operating performance in the second quarter of 2019 were offset by decreased train productivity and lower horsepower utilization in the third quarter of 2019 and as a result of harsh winter conditions and network disruptions in the first quarter of 2019. |
For the three months ended September 30 | For the nine months ended September 30 | ||||||||||||
(in millions, except per share data, percentages and ratios) | 2019 | 2018 | 2019 | 2018 | |||||||||
Financial Performance | |||||||||||||
Total revenues | $ | 1,979 | $ | 1,898 | $ | 5,723 | $ | 5,310 | |||||
Operating income | 869 | 790 | 2,234 | 1,957 | |||||||||
Net income | 618 | 622 | 1,776 | 1,406 | |||||||||
Adjusted income(1) | 640 | 589 | 1,634 | 1,432 | |||||||||
Basic EPS | 4.47 | 4.36 | 12.75 | 9.81 | |||||||||
Diluted EPS | 4.46 | 4.35 | 12.70 | 9.78 | |||||||||
Adjusted diluted EPS(1) | 4.61 | 4.12 | 11.68 | 9.97 | |||||||||
Dividends declared per share | 0.8300 | 0.6500 | 2.3100 | 1.8625 | |||||||||
Cash provided by operating activities | 823 | 673 | 1,957 | 1,781 | |||||||||
Free cash(1) | 363 | 245 | 821 | 740 | |||||||||
As at September 30, 2019 | As at December 31, 2018 | ||||||||||||
Financial Position | |||||||||||||
Total assets | $ | 22,539 | $ | 21,254 | |||||||||
Total long-term debt, including current portion | 8,983 | 8,696 | |||||||||||
Total shareholders’ equity | 7,215 | 6,636 | |||||||||||
For the twelve months ended September 30 | |||||||||||||
2019 | 2018 | ||||||||||||
Financial Ratios | |||||||||||||
Return on invested capital ("ROIC")(1) | 16.9 | % | 19.4 | % | |||||||||
Adjusted ROIC(1) | 16.6 | % | 15.7 | % | |||||||||
For the three months ended September 30 | For the nine months ended September 30 | ||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||
Operating ratio(2) | 56.1 | % | 58.3 | % | 61.0 | % | 63.1 | % |
(1) | These measures have no standardized meanings prescribed by accounting principles generally accepted in the United States of America ("GAAP") and, therefore, may not be comparable to similar measures presented by other companies. These measures are defined and reconciled in Non-GAAP Measures of this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
(2) | Operating ratio is defined as operating expenses divided by revenues, further discussed in Results of Operations of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | higher freight rates; |
• | lower stock-based and incentive compensation; and |
• | the favourable impact of $12 million from changes in fuel prices. |
• | lower volumes as measured by RTMs; |
• | cost inflation; and |
• | higher depreciation and amortization. |
• | higher freight rates; |
• | the impact of changes in fuel prices; and |
• | lower stock-based and incentive compensation. |
• | lower volumes as measured by RTMs; |
• | cost inflation; and |
• | higher depreciation and amortization. |
• | higher freight rates; |
• | the favourable impact of $49 million from changes in fuel prices; |
• | the favourable impact of change in FX of $38 million; |
• | higher volumes; and |
• | the efficiencies generated from improved operating performance and asset utilization. |
• | increased operating expense associated with higher casualty costs in the first quarter of 2019; |
• | cost inflation; and |
• | increased weather related costs as a result of harsh winter operating conditions in the first quarter of 2019. |
• | higher freight rates; |
• | the impact of changes in fuel prices; and |
• | the efficiencies generated from improved operating performance and asset utilization. |
• | increased operating expense associated with higher casualty costs in the first quarter of 2019; |
• | cost inflation; and |
• | increased weather related costs as a result of harsh winter operating conditions in the first quarter of 2019. |
Average exchange rates (Canadian/U.S. dollar) | 2019 | 2018 | ||||
For the three months ended - September 30 | $ | 1.32 | $ | 1.31 | ||
For the nine months ended - September 30 | $ | 1.33 | $ | 1.29 |
Ending exchange rates (Canadian/U.S. dollar) | 2019 | 2018 | ||||
Beginning of year - January 1 | $ | 1.36 | $ | 1.25 | ||
Beginning of quarter - July 1 | $ | 1.31 | $ | 1.32 | ||
End of quarter - September 30 | $ | 1.32 | $ | 1.29 |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
High/Low exchange rates (Canadian/U.S. dollar) | 2019 | 2018 | 2019 | 2018 | ||||||||
High | $ | 1.33 | $ | 1.33 | $ | 1.36 | $ | 1.33 | ||||
Low | $ | 1.30 | $ | 1.29 | $ | 1.30 | $ | 1.23 |
Average Fuel Price (U.S. dollars per U.S. gallon) | 2019 | 2018 | ||||
For the three months ended - September 30 | $ | 2.41 | $ | 2.69 | ||
For the nine months ended - September 30 | $ | 2.48 | $ | 2.72 |
TSX (in Canadian dollars) | 2019 | 2018 | ||||
Opening Common Share price, as at January 1 | $ | 242.24 | $ | 229.66 | ||
Ending Common Share price, as at June 30 | $ | 308.43 | $ | 240.92 | ||
Ending Common Share price, as at September 30 | $ | 294.42 | $ | 273.23 | ||
Change in Common Share price for the three months ended September 30 | $ | (14.01 | ) | $ | 32.31 | |
Change in Common Share price for the nine months ended September 30 | $ | 52.18 | $ | 43.57 |
NYSE (in U.S. dollars) | 2019 | 2018 | ||||
Opening Common Share price, as at January 1 | $ | 177.62 | $ | 182.76 | ||
Ending Common Share price, as at June 30 | $ | 235.24 | $ | 183.02 | ||
Ending Common Share price, as at September 30 | $ | 222.46 | $ | 211.94 | ||
Change in Common Share price for the three months ended September 30 | $ | (12.78 | ) | $ | 28.92 | |
Change in Common Share price for the nine months ended September 30 | $ | 44.84 | $ | 29.18 |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(2) | |||||||
Freight revenues (in millions)(1) | $ | 1,932 | $ | 1,854 | $ | 78 | 4 | 4 | ||||
Non-freight revenues (in millions) | 47 | 44 | 3 | 7 | 4 | |||||||
Total revenues (in millions) | $ | 1,979 | $ | 1,898 | $ | 81 | 4 | 4 | ||||
Carloads (in thousands) | 711.9 | 702.0 | 9.9 | 1 | N/A | |||||||
Revenue ton-miles (in millions) | 39,172 | 39,664 | (492 | ) | (1 | ) | N/A | |||||
Freight revenue per carload (in dollars) | $ | 2,714 | $ | 2,640 | $ | 74 | 3 | 2 | ||||
Freight revenue per revenue ton-mile (in cents) | 4.93 | 4.67 | 0.26 | 6 | 5 |
(1) | Freight revenues include fuel surcharge revenues of $119 million in 2019 and $137 million in 2018. 2019 and 2018 fuel surcharge revenues include carbon taxes, levies, and obligations recovered under cap-and-trade programs. |
(2) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(2) | ||||||
Freight revenues (in millions)(1) | $ | 5,589 | $ | 5,188 | $ | 401 | 8 | 6 | |||
Non-freight revenues (in millions) | 134 | 122 | 12 | 10 | 9 | ||||||
Total revenues (in millions) | $ | 5,723 | $ | 5,310 | $ | 413 | 8 | 6 | |||
Carloads (in thousands) | 2,064.3 | 2,029.9 | 34.4 | 2 | N/A | ||||||
Revenue ton-miles (in millions) | 114,994 | 113,584 | 1,410 | 1 | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 2,707 | $ | 2,556 | $ | 151 | 6 | 4 | |||
Freight revenue per revenue ton-mile (in cents) | 4.86 | 4.57 | 0.29 | 6 | 5 |
(1) | Freight revenues include fuel surcharge revenues of $352 million in 2019 and $351 million in 2018. 2019 and 2018 fuel surcharge revenues include carbon taxes, levies, and obligations recovered under cap-and-trade programs. |
(2) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 409 | $ | 384 | $ | 25 | 7 | 6 | ||||
Carloads (in thousands) | 106.6 | 107.4 | (0.8 | ) | (1 | ) | N/A | |||||
Revenue ton-miles (in millions) | 8,953 | 9,009 | (56 | ) | (1 | ) | N/A | |||||
Freight revenue per carload (in dollars) | $ | 3,837 | $ | 3,565 | $ | 272 | 8 | 7 | ||||
Freight revenue per revenue ton-mile (in cents) | 4.57 | 4.25 | 0.32 | 8 | 7 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 1,211 | $ | 1,113 | $ | 98 | 9 | 7 | ||||
Carloads (in thousands) | 312.5 | 314.5 | (2.0 | ) | (1 | ) | N/A | |||||
Revenue ton-miles (in millions) | 26,757 | 26,698 | 59 | — | N/A | |||||||
Freight revenue per carload (in dollars) | $ | 3,875 | $ | 3,536 | $ | 339 | 10 | 8 | ||||
Freight revenue per revenue ton-mile (in cents) | 4.53 | 4.17 | 0.36 | 9 | 7 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 183 | $ | 171 | $ | 12 | 7 | 7 | ||||
Carloads (in thousands) | 81.2 | 76.8 | 4.4 | 6 | N/A | |||||||
Revenue ton-miles (in millions) | 5,761 | 5,764 | (3 | ) | — | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 2,254 | $ | 2,234 | $ | 20 | 1 | 1 | ||||
Freight revenue per revenue ton-mile (in cents) | 3.18 | 2.98 | 0.20 | 7 | 7 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 514 | $ | 486 | $ | 28 | 6 | 5 | ||||
Carloads (in thousands) | 229.3 | 226.7 | 2.6 | 1 | N/A | |||||||
Revenue ton-miles (in millions) | 16,485 | 16,657 | (172 | ) | (1 | ) | N/A | |||||
Freight revenue per carload (in dollars) | $ | 2,242 | $ | 2,145 | $ | 97 | 5 | 4 | ||||
Freight revenue per revenue ton-mile (in cents) | 3.12 | 2.92 | 0.20 | 7 | 6 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 117 | $ | 130 | $ | (13 | ) | (10 | ) | (10 | ) | ||
Carloads (in thousands) | 36.3 | 42.3 | (6.0 | ) | (14 | ) | N/A | ||||||
Revenue ton-miles (in millions) | 4,188 | 4,944 | (756 | ) | (15 | ) | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 3,223 | $ | 3,089 | $ | 134 | 4 | 5 | |||||
Freight revenue per revenue ton-mile (in cents) | 2.79 | 2.64 | 0.15 | 6 | 6 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 367 | $ | 358 | $ | 9 | 3 | 1 | ||||
Carloads (in thousands) | 118.6 | 117.4 | 1.2 | 1 | N/A | |||||||
Revenue ton-miles (in millions) | 14,003 | 13,750 | 253 | 2 | N/A | |||||||
Freight revenue per carload (in dollars) | $ | 3,094 | $ | 3,052 | $ | 42 | 1 | — | ||||
Freight revenue per revenue ton-mile (in cents) | 2.62 | 2.61 | 0.01 | — | (1 | ) |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||
Freight revenues (in millions) | $ | 66 | $ | 55 | $ | 11 | 20 | 18 | |||
Carloads (in thousands) | 14.8 | 13.8 | 1.0 | 7 | N/A | ||||||
Revenue ton-miles (in millions) | 1,030 | 935 | 95 | 10 | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 4,459 | $ | 3,957 | $ | 502 | 13 | 10 | |||
Freight revenue per revenue ton-mile (in cents) | 6.41 | 5.87 | 0.54 | 9 | 7 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 186 | $ | 171 | $ | 15 | 9 | 6 | ||||
Carloads (in thousands) | 42.6 | 41.9 | 0.7 | 2 | N/A | |||||||
Revenue ton-miles (in millions) | 2,872 | 2,902 | (30 | ) | (1 | ) | N/A | |||||
Freight revenue per carload (in dollars) | $ | 4,366 | $ | 4,084 | $ | 282 | 7 | 5 | ||||
Freight revenue per revenue ton-mile (in cents) | 6.48 | 5.90 | 0.58 | 10 | 7 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 78 | $ | 76 | $ | 2 | 3 | 3 | |||||
Carloads (in thousands) | 18.5 | 17.9 | 0.6 | 3 | N/A | ||||||||
Revenue ton-miles (in millions) | 1,278 | 1,263 | 15 | 1 | N/A | ||||||||
Freight revenue per carload (in dollars) | $ | 4,216 | $ | 4,240 | $ | (24 | ) | (1 | ) | (1 | ) | ||
Freight revenue per revenue ton-mile (in cents) | 6.10 | 6.01 | 0.09 | 1 | 1 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||
Freight revenues (in millions) | $ | 229 | $ | 211 | $ | 18 | 9 | 6 | |||
Carloads (in thousands) | 54.1 | 51.5 | 2.6 | 5 | N/A | ||||||
Revenue ton-miles (in millions) | 3,746 | 3,596 | 150 | 4 | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 4,233 | $ | 4,107 | $ | 126 | 3 | 1 | |||
Freight revenue per revenue ton-mile (in cents) | 6.11 | 5.88 | 0.23 | 4 | 2 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||
Freight revenues (in millions) | $ | 382 | $ | 339 | $ | 43 | 13 | 12 | |||
Carloads (in thousands) | 90.8 | 89.1 | 1.7 | 2 | N/A | ||||||
Revenue ton-miles (in millions) | 7,571 | 7,485 | 86 | 1 | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 4,207 | $ | 3,806 | $ | 401 | 11 | 10 | |||
Freight revenue per revenue ton-mile (in cents) | 5.05 | 4.53 | 0.52 | 11 | 11 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||
Freight revenues (in millions) | $ | 1,043 | $ | 874 | $ | 169 | 19 | 17 | |||
Carloads (in thousands) | 257.0 | 242.4 | 14.6 | 6 | N/A | ||||||
Revenue ton-miles (in millions) | 20,901 | 20,047 | 854 | 4 | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 4,058 | $ | 3,606 | $ | 452 | 13 | 10 | |||
Freight revenue per revenue ton-mile (in cents) | 4.99 | 4.36 | 0.63 | 14 | 12 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 201 | $ | 208 | $ | (7 | ) | (3 | ) | (4 | ) | ||
Carloads (in thousands) | 62.9 | 65.0 | (2.1 | ) | (3 | ) | N/A | ||||||
Revenue ton-miles (in millions) | 2,910 | 2,979 | (69 | ) | (2 | ) | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 3,196 | $ | 3,206 | $ | (10 | ) | — | (1 | ) | |||
Freight revenue per revenue ton-mile (in cents) | 6.91 | 7.00 | (0.09 | ) | (1 | ) | (2 | ) |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 579 | $ | 595 | $ | (16 | ) | (3 | ) | (5 | ) | ||
Carloads (in thousands) | 180.1 | 189.6 | (9.5 | ) | (5 | ) | N/A | ||||||
Revenue ton-miles (in millions) | 8,225 | 9,067 | (842 | ) | (9 | ) | N/A | ||||||
Freight revenue per carload (in dollars) | $ | 3,215 | $ | 3,140 | $ | 75 | 2 | — | |||||
Freight revenue per revenue ton-mile (in cents) | 7.04 | 6.57 | 0.47 | 7 | 4 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 87 | $ | 85 | $ | 2 | 2 | 1 | |||||
Carloads (in thousands) | 29.2 | 27.4 | 1.8 | 7 | N/A | ||||||||
Revenue ton-miles (in millions) | 351 | 343 | 8 | 2 | N/A | ||||||||
Freight revenue per carload (in dollars) | $ | 2,979 | $ | 3,102 | $ | (123 | ) | (4 | ) | (5 | ) | ||
Freight revenue per revenue ton-mile (in cents) | 24.79 | 24.76 | 0.03 | — | (1 | ) |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | |||||||
Freight revenues (in millions) | $ | 267 | $ | 247 | $ | 20 | 8 | 6 | ||||
Carloads (in thousands) | 85.8 | 83.0 | 2.8 | 3 | N/A | |||||||
Revenue ton-miles (in millions) | 1,125 | 1,047 | 78 | 7 | N/A | |||||||
Freight revenue per carload (in dollars) | $ | 3,112 | $ | 2,970 | $ | 142 | 5 | 2 | ||||
Freight revenue per revenue ton-mile (in cents) | 23.73 | 23.56 | 0.17 | 1 | (2 | ) |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 409 | $ | 406 | $ | 3 | 1 | — | |||||
Carloads (in thousands) | 271.6 | 262.3 | 9.3 | 4 | N/A | ||||||||
Revenue ton-miles (in millions) | 7,130 | 6,942 | 188 | 3 | N/A | ||||||||
Freight revenue per carload (in dollars) | $ | 1,506 | $ | 1,545 | $ | (39 | ) | (3 | ) | (3 | ) | ||
Freight revenue per revenue ton-mile (in cents) | 5.74 | 5.84 | (0.10 | ) | (2 | ) | (2 | ) |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the nine months ended September 30 | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Freight revenues (in millions) | $ | 1,193 | $ | 1,133 | $ | 60 | 5 | 4 | |||||
Carloads (in thousands) | 784.3 | 762.9 | 21.4 | 3 | N/A | ||||||||
Revenue ton-miles (in millions) | 20,880 | 19,820 | 1,060 | 5 | N/A | ||||||||
Freight revenue per carload (in dollars) | $ | 1,521 | $ | 1,485 | $ | 36 | 2 | 2 | |||||
Freight revenue per revenue ton-mile (in cents) | 5.71 | 5.72 | (0.01 | ) | — | (1 | ) |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
For the three months ended September 30 (in millions) | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Compensation and benefits | $ | 355 | $ | 365 | $ | (10 | ) | (3 | ) | (3 | ) | ||
Fuel | 210 | 226 | (16 | ) | (7 | ) | (8 | ) | |||||
Materials | 50 | 47 | 3 | 6 | 6 | ||||||||
Equipment rents | 33 | 33 | — | — | — | ||||||||
Depreciation and amortization | 185 | 174 | 11 | 6 | 6 | ||||||||
Purchased services and other | 277 | 263 | 14 | 5 | 5 | ||||||||
Total operating expenses | $ | 1,110 | $ | 1,108 | $ | 2 | — | — |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | cost inflation; |
• | higher depreciation and amortization; |
• | higher volume variable expenses as measured by GTMs; |
• | the unfavourable impact of the change in FX of $5 million; |
• | lower gains on land sales of $4 million; and |
• | higher legal fees. |
For the nine months ended September 30 (in millions) | 2019 | 2018 | Total Change | % Change | FX Adjusted % Change(1) | ||||||||
Compensation and benefits | $ | 1,144 | $ | 1,090 | $ | 54 | 5 | 4 | |||||
Fuel | 655 | 671 | (16 | ) | (2 | ) | (5 | ) | |||||
Materials | 161 | 155 | 6 | 4 | 3 | ||||||||
Equipment rents | 102 | 99 | 3 | 3 | — | ||||||||
Depreciation and amortization | 528 | 516 | 12 | 2 | 2 | ||||||||
Purchased services and other | 899 | 822 | 77 | 9 | 8 | ||||||||
Total operating expenses | $ | 3,489 | $ | 3,353 | $ | 136 | 4 | 3 |
(1) | FX Adjusted % Change does not have any standardized meaning prescribed by GAAP and, therefore, is unlikely to be comparable to similar measures presented by other companies. FX Adjusted % Change is defined and reconciled in Non-GAAP Measures of this Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. |
• | increased operating expense associated with higher casualty costs incurred in the first quarter of 2019; |
• | the unfavourable impact of the change in FX of $48 million; |
• | cost inflation; |
• | higher volume variable expenses; |
• | increased weather related costs as a result of harsh winter operating conditions in the first quarter of 2019; and |
• | higher stock-based compensation. |
• | the favourable impact of $58 million from lower fuel prices; |
• | the efficiencies generated from improved operating performance and asset utilization; |
• | lower incentive compensation; and |
• | higher gains on land sales of $11 million. |
• | higher stock-based compensation; |
• | the impact of wage and benefit inflation; |
• | the impact of harsher winter operating conditions; |
• | higher volume variable expense as a result of increased workload as measured by GTMs; and |
• | the unfavourable impact of the change in FX of $11 million. |
• | an increase in workload, as measured by GTMs; |
• | a decrease in fuel efficiency of approximately 1% due to reduced train productivity and lower horsepower utilization; and |
• | the unfavourable impact of the change in FX of $3 million. |
For the three months ended September 30 (in millions) | 2019 | 2018 | Total Change | % Change | |||||||
Support and facilities | $ | 70 | $ | 62 | $ | 8 | 13 | ||||
Track and operations | 66 | 60 | 6 | 10 | |||||||
Intermodal | 54 | 56 | (2 | ) | (4 | ) | |||||
Equipment | 31 | 36 | (5 | ) | (14 | ) | |||||
Casualty | 24 | 23 | 1 | 4 | |||||||
Property taxes | 31 | 28 | 3 | 11 | |||||||
Other | 1 | 2 | (1 | ) | (50 | ) | |||||
Land sales | — | (4 | ) | 4 | (100 | ) | |||||
Total Purchased services and other | $ | 277 | $ | 263 | $ | 14 | 5 |
• | an increase in legal fees, reported in Support and facilities; |
• | gains related to Land sales in the third quarter of 2018, reported in Land sales; |
• | an increase in right-of-way maintenance, crew accommodation and transportation, reported in Track & operations; |
• | higher property taxes due to higher tax rates; and |
• | the unfavourable impact of the change in FX of $1 million. |
• | a decrease in costs for locomotive warranty service agreements due to insourcing, reported in Equipment; and |
• | lower intermodal expenses related to pickup and delivery services, reported in Intermodal. |
For the nine months ended September 30 (in millions) | 2019 | 2018 | Total Change | % Change | |||||||
Support and facilities | $ | 207 | $ | 193 | $ | 14 | 7 | ||||
Track and operations | 215 | 206 | 9 | 4 | |||||||
Intermodal | 165 | 163 | 2 | 1 | |||||||
Equipment | 98 | 110 | (12 | ) | (11 | ) | |||||
Casualty | 109 | 57 | 52 | 91 | |||||||
Property taxes | 103 | 95 | 8 | 8 | |||||||
Other | 19 | 4 | 15 | 375 | |||||||
Land sales | (17 | ) | (6 | ) | (11 | ) | 183 | ||||
Total Purchased services and other | $ | 899 | $ | 822 | $ | 77 | 9 |
• | higher expenses primarily due to the increased number and severity of casualty incidents, which were the result of difficult operating conditions due to weather, reported in Casualty; |
• | the unfavourable impact of the change in FX of $11 million; |
• | higher snow removal and other weather related costs reported in Track and operations and Intermodal; |
• | a $10 million charge associated with a dispute settlement, reported in Other; |
• | higher property taxes due to higher tax rates; and |
• | an increase in legal fees, reported in Support and facilities. |
• | higher gains on land sales of $11 million, reported in Land sales; |
• | a decrease in costs for locomotive warranty service agreements due to insourcing, reported in Equipment; and |
• | costs related to labour disruptions in the second quarter of 2018, reported in Track and operations. |
Long-term debt | Outlook | ||
Standard & Poor's | |||
Long-term corporate credit | BBB+ | stable | |
Senior secured debt | A | stable | |
Senior unsecured debt | BBB+ | stable | |
Moody's | |||
Senior unsecured debt | Baa1 | stable | |
Commercial paper program | |||
Standard & Poor's | A-2 | N/A | |
Moody's | P-2 | N/A |
• | in the second quarter, a deferred tax recovery of $88 million due to the change in the Alberta provincial corporate income tax rate that favourably impacted Diluted EPS by 63 cents; and |
• | during the year to date, a net non-cash gain of $57 million ($54 million after deferred tax) due to FX translation of debt and lease liabilities as follows: |
– | in the third quarter, a $25 million loss ($22 million after deferred tax) that unfavourably impacted Diluted EPS by 15 cents; |
– | in the second quarter, a $37 million gain ($34 million after deferred tax) that favourably impacted Diluted EPS by 24 cents; and |
– | in the first quarter, a $45 million gain ($42 million after deferred tax) that favourably impacted Diluted EPS by 30 cents. |
• | in the second quarter, a deferred tax recovery of $21 million due to reductions in the Missouri and Iowa state tax rates that favourably impacted Diluted EPS by 15 cents; and |
• | during the course of the year, a net non-cash loss of $168 million ($150 million after deferred tax) due to FX translation of debt as follows: |
– | in the fourth quarter, a $113 million loss ($103 million after deferred tax) that unfavourably impacted Diluted EPS by 72 cents; |
– | in the third quarter, a $38 million gain ($33 million after deferred tax) that favourably impacted Diluted EPS by 23 cents; |
– | in the second quarter, a $44 million loss ($38 million after deferred tax) that unfavourably impacted Diluted EPS by 27 cents; and |
– | in the first quarter, a $49 million loss ($42 million after deferred tax) that unfavourably impacted Diluted EPS by 29 cents. |
• | a deferred tax recovery of $527 million, primarily due to the U.S. tax reform, that favourably impacted Diluted EPS by $3.63; and |
• | a non-cash loss of $14 million ($12 million after deferred tax) due to FX translation of debt that unfavourably impacted Diluted EPS by 8 cents. |
For the three months ended September 30 | For the nine months ended September 30 | For the twelve months ended December 31 | |||||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | 2018 | ||||||||||
Net income as reported | $ | 618 | $ | 622 | $ | 1,776 | $ | 1,406 | $ | 1,951 | |||||
Less significant items (pre-tax): | |||||||||||||||
Impact of FX translation (loss) gain on debt and lease liabilities | (25 | ) | 38 | 57 | (55 | ) | (168 | ) | |||||||
Add: | |||||||||||||||
Tax effect of adjustments(1) | (3 | ) | 5 | 3 | (8 | ) | (18 | ) | |||||||
Income tax rate changes | — | — | (88 | ) | (21 | ) | (21 | ) | |||||||
Adjusted income | $ | 640 | $ | 589 | $ | 1,634 | $ | 1,432 | $ | 2,080 |
For the three months ended September 30 | For the nine months ended September 30 | For the twelve months ended December 31 | |||||||||||||
2019 | 2018 | 2019 | 2018 | 2018 | |||||||||||
Diluted earnings per share as reported | $ | 4.46 | $ | 4.35 | $ | 12.70 | $ | 9.78 | $ | 13.61 | |||||
Less significant items (pre-tax): | |||||||||||||||
Impact of FX translation (loss) gain on debt and lease liabilities | (0.18 | ) | 0.27 | 0.41 | (0.38 | ) | (1.17 | ) | |||||||
Add: | |||||||||||||||
Tax effect of adjustments(1) | (0.03 | ) | 0.04 | 0.02 | (0.04 | ) | (0.12 | ) | |||||||
Income tax rate changes | — | — | (0.63 | ) | (0.15 | ) | (0.15 | ) | |||||||
Adjusted diluted earnings per share | $ | 4.61 | $ | 4.12 | $ | 11.68 | $ | 9.97 | $ | 14.51 |
For the twelve months ended September 30 | ||||||
(in millions, except for percentages) | 2019 | 2018 | ||||
Operating income as reported | $ | 3,108 | $ | 2,639 | ||
Less: | ||||||
Other expense | 60 | 72 | ||||
Other components of net periodic benefit recovery | (391 | ) | (358 | ) | ||
Tax(1) | 771 | 95 | ||||
$ | 2,668 | $ | 2,830 | |||
Average invested capital | $ | 15,806 | $ | 14,556 | ||
ROIC | 16.9 | % | 19.4 | % |
For the twelve months ended September 30 | ||||||
(in millions, except for percentages) | 2019 | 2018 | ||||
Operating income as reported | $ | 3,108 | $ | 2,639 | ||
Less: | ||||||
Other expense | 60 | 72 | ||||
Other components of net periodic benefit recovery | (391 | ) | (358 | ) | ||
Significant items (pre-tax): | ||||||
Impact of FX translation loss on debt and lease liabilities | (56 | ) | (69 | ) | ||
Tax(1) | 878 | 752 | ||||
$ | 2,617 | $ | 2,242 | |||
Average invested capital | $ | 15,806 | $ | 14,556 | ||
Less impact of periodic significant items net of tax on the above average: | ||||||
Income tax recovery from income tax rate changes | 44 | 274 | ||||
Adjusted average invested capital | $ | 15,762 | $ | 14,282 | ||
Adjusted ROIC | 16.6 | % | 15.7 | % |
For the three months ended September 30 | For the nine months ended September 30 | |||||||||||
(in millions) | 2019 | 2018 | 2019 | 2018 | ||||||||
Cash provided by operating activities | $ | 823 | $ | 673 | $ | 1,957 | $ | 1,781 | ||||
Cash used in investing activities | (461 | ) | (423 | ) | (1,135 | ) | (1,069 | ) | ||||
Effect of foreign currency fluctuations on U.S. dollar-denominated cash and cash equivalents | 1 | (5 | ) | (1 | ) | 4 | ||||||
Settlement of forward starting swaps on debt issuance | — | — | — | 24 | ||||||||
Free cash | $ | 363 | $ | 245 | $ | 821 | $ | 740 |
For the three months ended September 30 | ||||||||||||||
(in millions) | Reported 2019 | Reported 2018 | Variance due to FX | FX Adjusted 2018 | FX Adjusted % Change | |||||||||
Freight revenues by line of business | ||||||||||||||
Grain | $ | 409 | $ | 384 | $ | 1 | $ | 385 | 6 | |||||
Coal | 183 | 171 | — | 171 | 7 | |||||||||
Potash | 117 | 130 | — | 130 | (10 | ) | ||||||||
Fertilizers and sulphur | 66 | 55 | 1 | 56 | 18 | |||||||||
Forest products | 78 | 76 | — | 76 | 3 | |||||||||
Energy, chemicals and plastics | 382 | 339 | 2 | 341 | 12 | |||||||||
Metals, minerals and consumer products | 201 | 208 | 2 | 210 | (4 | ) | ||||||||
Automotive | 87 | 85 | 1 | 86 | 1 | |||||||||
Intermodal | 409 | 406 | 1 | 407 | — | |||||||||
Freight revenues | 1,932 | 1,854 | 8 | 1,862 | 4 | |||||||||
Non-freight revenues | 47 | 44 | 1 | 45 | 4 | |||||||||
Total revenues | $ | 1,979 | $ | 1,898 | $ | 9 | $ | 1,907 | 4 |
For the nine months ended September 30 | ||||||||||||||
(in millions) | Reported 2019 | Reported 2018 | Variance due to FX | FX Adjusted 2018 | FX Adjusted % Change | |||||||||
Freight revenues by line of business | ||||||||||||||
Grain | $ | 1,211 | $ | 1,113 | $ | 19 | $ | 1,132 | 7 | |||||
Coal | 514 | 486 | 2 | 488 | 5 | |||||||||
Potash | 367 | 358 | 6 | 364 | 1 | |||||||||
Fertilizers and sulphur | 186 | 171 | 4 | 175 | 6 | |||||||||
Forest products | 229 | 211 | 5 | 216 | 6 | |||||||||
Energy, chemicals and plastics | 1,043 | 874 | 17 | 891 | 17 | |||||||||
Metals, minerals and consumer products | 579 | 595 | 16 | 611 | (5 | ) | ||||||||
Automotive | 267 | 247 | 6 | 253 | 6 | |||||||||
Intermodal | 1,193 | 1,133 | 10 | 1,143 | 4 | |||||||||
Freight revenues | 5,589 | 5,188 | 85 | 5,273 | 6 | |||||||||
Non-freight revenues | 134 | 122 | 1 | 123 | 9 | |||||||||
Total revenues | $ | 5,723 | $ | 5,310 | $ | 86 | $ | 5,396 | 6 |
For the three months ended September 30 | ||||||||||||||
(in millions) | Reported 2019 | Reported 2018 | Variance due to FX | FX Adjusted 2018 | FX Adjusted % Change | |||||||||
Compensation and benefits | $ | 355 | $ | 365 | $ | 1 | $ | 366 | (3 | ) | ||||
Fuel | 210 | 226 | 3 | 229 | (8 | ) | ||||||||
Materials | 50 | 47 | — | 47 | 6 | |||||||||
Equipment rents | 33 | 33 | — | 33 | — | |||||||||
Depreciation and amortization | 185 | 174 | — | 174 | 6 | |||||||||
Purchased services and other | 277 | 263 | 1 | 264 | 5 | |||||||||
Total operating expenses | $ | 1,110 | $ | 1,108 | $ | 5 | $ | 1,113 | — |
For the nine months ended September 30 | ||||||||||||||
(in millions) | Reported 2019 | Reported 2018 | Variance due to FX | FX Adjusted 2018 | FX Adjusted % Change | |||||||||
Compensation and benefits | $ | 1,144 | $ | 1,090 | $ | 11 | $ | 1,101 | 4 | |||||
Fuel | 655 | 671 | 18 | 689 | (5 | ) | ||||||||
Materials | 161 | 155 | 1 | 156 | 3 | |||||||||
Equipment rents | 102 | 99 | 3 | 102 | — | |||||||||
Depreciation and amortization | 528 | 516 | 4 | 520 | 2 | |||||||||
Purchased services and other | 899 | 822 | 11 | 833 | 8 | |||||||||
Total operating expenses | $ | 3,489 | $ | 3,353 | $ | 48 | $ | 3,401 | 3 |
For the twelve months ended September 30 | ||||||
(in millions) | 2019 | 2018 | ||||
Net income as reported | $ | 2,321 | $ | 2,390 | ||
Add: | ||||||
Net interest expense | 450 | 455 | ||||
Income tax expense | 668 | 80 | ||||
EBIT | 3,439 | 2,925 | ||||
Less significant items (pre-tax): | ||||||
Impact of FX translation loss on debt and lease liabilities | (56 | ) | (69 | ) | ||
Adjusted EBIT | 3,495 | 2,994 | ||||
Less: | ||||||
Other components of net periodic benefit recovery | 391 | 358 | ||||
Operating lease expense | (99 | ) | (87 | ) | ||
Depreciation and amortization | (708 | ) | (684 | ) | ||
Adjusted EBITDA | $ | 3,911 | $ | 3,407 |
(in millions) | 2019 | 2018 | ||||
Long-term debt including long-term debt maturing within one year as at September 30 | $ | 8,983 | $ | 8,286 | ||
Less: | ||||||
Pension plans deficit(1) | (260 | ) | (276 | ) | ||
Operating lease liabilities(2) | (370 | ) | (261 | ) | ||
Cash and cash equivalents | 145 | 150 | ||||
Adjusted net debt as at September 30 | $ | 9,468 | $ | 8,673 |
(in millions, except for ratios) | 2019 | 2018 | ||||
Adjusted net debt as at September 30 | $ | 9,468 | $ | 8,673 | ||
Adjusted EBITDA for the year ended September 30 | 3,911 | 3,407 | ||||
Adjusted net debt to Adjusted EBITDA ratio | 2.4 | 2.5 |
Payments due by period (in millions) | Total | 2019 | 2020 & 2021 | 2022 & 2023 | 2024 & beyond | ||||||||||
Contractual commitments | |||||||||||||||
Interest on long-term debt and finance leases | $ | 11,410 | $ | 65 | $ | 871 | $ | 743 | $ | 9,731 | |||||
Long-term debt | 8,914 | 610 | 437 | 977 | 6,890 | ||||||||||
Finance leases | 155 | 2 | 14 | 114 | 25 | ||||||||||
Operating lease(1) | 421 | 28 | 123 | 92 | 178 | ||||||||||
Supplier purchase | 1,063 | 193 | 214 | 193 | 463 | ||||||||||
Other long-term liabilities(2) | 462 | 15 | 105 | 101 | 241 | ||||||||||
Total contractual commitments | $ | 22,425 | $ | 913 | $ | 1,764 | $ | 2,220 | $ | 17,528 |
Payments due by period (in millions) | Total | 2019 | 2020 & 2021 | 2022 & 2023 | 2024 & beyond | ||||||||||
Certain other financial commitments | |||||||||||||||
Letters of credit | $ | 61 | $ | 61 | $ | — | $ | — | $ | — | |||||
Capital commitments | 853 | 231 | 443 | 65 | 114 | ||||||||||
Total certain other financial commitments | $ | 914 | $ | 292 | $ | 443 | $ | 65 | $ | 114 |
2019 | Total Number of Shares Purchased(1) | Average Price Paid per Share(2) | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares (or Units) that May Yet Be Purchased Under the Plans or Programs | |||||
July 1 to July 31 | 726,863 | $ | 312.65 | 726,863 | 1,104,956 | ||||
August 1 to August 31 | 369,405 | 312.57 | 369,405 | 735,551 | |||||
September 1 to September 30 | 423,272 | 304.50 | 423,272 | 312,279 | |||||
Ending Balance | 1,519,540 | $ | 310.36 | 1,519,540 | N/A |
Exhibit | Description |
101.INS* | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
101.SCH* | Inline XBRL Taxonomy Extension Schema Document |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
The following financial information from Canadian Pacific Railway Limited's Quarterly Report on Form 10-Q for the third quarter ended September 30, 2019, formatted in Extensible Business Reporting Language (XBRL) includes: (i) the Interim Consolidated Statements of Income for the third quarters and first nine months ended September 30, 2019 and 2018; (ii) the Interim Consolidated Statements of Comprehensive Income for the third quarters and first nine months ended September 30, 2019 and 2018; (iii) the Interim Consolidated Balance Sheets at September 30, 2019, and December 31, 2018; (iv) the Interim Consolidated Statements of Cash Flows for the third quarters and first nine months ended September 30, 2019 and 2018; (v) the Interim Consolidated Statements of Changes in Shareholders’ Equity for the third quarters and first nine months ended September 30, 2019 and 2018; and (vi) the Notes to Interim Consolidated Financial Statements. | |
104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) |
CANADIAN PACIFIC RAILWAY LIMITED | |
(Registrant) | |
By: | /s/ NADEEM VELANI |
Nadeem Velani | |
Executive Vice-President and Chief Financial Officer (Principal Financial Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Canadian Pacific Railway Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: October 23, 2019 | /s/ KEITH CREEL | |
Keith Creel | ||
President and Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of Canadian Pacific Railway Limited; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: October 23, 2019 | /s/ NADEEM VELANI | |
Nadeem Velani | ||
Executive Vice-President and Chief Financial Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 23, 2019 | /s/ KEITH CREEL | |||
Keith Creel | ||||
President and Chief Executive Officer |
1. | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: October 23, 2019 | /s/ NADEEM VELANI | |||
Nadeem Velani | ||||
Executive Vice-President and Chief Financial Officer |
Accounting Changes (Tables) |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impact of ASC 842 Adoption | The impact of the adoption of ASC 842 as at January 1, 2019 was as follows:
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Condensed Consolidating Financial Information |
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Condensed Consolidating Financial Information | Condensed consolidating financial information Canadian Pacific Railway Company, a 100%-owned subsidiary of Canadian Pacific Railway Limited (“CPRL”), is the issuer of certain debt securities, which are fully and unconditionally guaranteed by CPRL. The following tables present condensed consolidating financial information (“CCFI”) in accordance with Rule 3-10(c) of Regulation S-X. Investments in subsidiaries are accounted for under the equity method when presenting the CCFI. The tables include all adjustments necessary to reconcile the CCFI on a consolidated basis to CPRL’s consolidated financial statements for the periods presented. Interim Condensed Consolidating Statements of Income For the three months ended September 30, 2019
Interim Condensed Consolidating Statements of Income For the three months ended September 30, 2018
Interim Condensed Consolidating Statements of Income For the nine months ended September 30, 2019
Interim Condensed Consolidating Statements of Income For the nine months ended September 30, 2018
Interim Condensed Consolidating Statements of Comprehensive Income For the three months ended September 30, 2019
Interim Condensed Consolidating Statements of Comprehensive Income For the three months ended September 30, 2018
Interim Condensed Consolidating Statements of Comprehensive Income For the nine months ended September 30, 2019
Interim Condensed Consolidating Statements of Comprehensive Income For the nine months ended September 30, 2018
Interim Condensed Consolidating Balance Sheets As at September 30, 2019
Condensed Consolidating Balance Sheets As at December 31, 2018
Interim Condensed Consolidating Statements of Cash Flows For the three months ended September 30, 2019
Interim Condensed Consolidating Statements of Cash Flows For the three months ended September 30, 2018
Interim Condensed Consolidating Statements of Cash Flows For the nine months ended September 30, 2019
Interim Condensed Consolidating Statements of Cash Flows For the nine months ended September 30, 2018
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Income Taxes (Tables) |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Income Tax Expense |
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Accounting Changes |
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New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes | Accounting changes Implemented in 2019 Leases On January 1, 2019, the Company adopted the new Accounting Standards Update ("ASU") 2016-02, issued by the Financial Accounting Standards Board ("FASB"), and all related amendments under FASB Accounting Standards Codification ("ASC") Topic 842, Leases. Using the cumulative-effect adjustment transition approach, the Company recognized a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Accordingly, comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. In January 2019, the Company implemented a lease management system to assist in delivering the required accounting changes. To facilitate the transition, the Company made policy choices to utilize available practical expedients provided by the new standard, including the:
Operating leases with fixed terms and in-substance fixed terms were transitioned by recognizing both an operating lease liability and right-of-use ("ROU") asset. Operating lease liabilities and ROU assets were calculated at the present value of remaining lease payments using the Company’s incremental borrowing interest rate as at January 1, 2019. ROU assets were further modified to include previously accrued balances for prepayments and initial direct costs, but reduced for accrued lease incentives. The Company did not recognize operating lease liabilities or ROU assets for leases requiring variable payment not dependent on an index or rate, or short term leases with a term of 12 months or less. On adoption, the standard had a material impact on the Company's consolidated balance sheet, but did not have a significant impact on its consolidated statement of income. The most significant impact was the recognition of operating lease ROU assets and operating lease liabilities, while the Company's accounting for finance leases remained substantially unchanged. The impact of the adoption of ASC 842 as at January 1, 2019 was as follows:
There was no significant impact to lessor accounting upon the adoption of ASC 842. Future changes Financial Instruments - Credit Losses In June 2016, the FASB issued ASU 2016-13, Measurement of Credit Losses on Financial Instruments under FASB ASC Topic 326. This will replace the current incurred loss methodology used for establishing a provision against financial assets, including accounts receivable, with a forward-looking expected loss methodology for accounts receivable, loans and other financial instruments. The standard is effective as of January 1, 2020. Entities are required to apply the amendments in this update using a modified retrospective approach, through a cumulative-effect adjustment to retained earnings as of the effective date. The Company is currently performing analysis to determine the impact this new accounting standard will have on its financial statements, as well as determining the most appropriate portfolios of financial assets and the expected loss methodology to apply to each portfolio.
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Contingencies - Environmental Liabilities (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2018 |
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Site Contingency [Line Items] | |||||
Total amount provided for provisions for environmental remediation costs | $ 80 | $ 80 | $ 82 | ||
Term for expected payments to be made | 10 years | ||||
Purchased services and other | |||||
Site Contingency [Line Items] | |||||
Environmental remediation expense | $ 2 | $ 2 | $ 4 | $ 4 |
Leases - Narrative (Details) $ in Millions |
9 Months Ended |
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Sep. 30, 2019
CAD ($)
| |
Lessee, Lease, Description [Line Items] | |
Operating lease, Option to extend | P10Y |
Operating lease, Option to terminate | P1Y |
Operating lease, Residual value guarantee | $ 2 |
Minimum [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease, Term of contract | 1 year |
Finance lease, Term of contract | 1 year |
Maximum [Member] | |
Lessee, Lease, Description [Line Items] | |
Operating lease, Term of contract | 12 years |
Finance lease, Term of contract | 12 years |
Income Taxes - Narrative (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Income Tax Disclosure [Abstract] | ||||
Effect of change in enacted tax rate | $ (88) | $ (21) | ||
Effective tax rate | 25.43% | 24.23% | 21.06% | 23.95% |
Foreign exchange loss (gain) on debt and lease liabilities | $ 25 | $ (38) | $ (57) | $ 55 |
Effective tax rate, excluding discrete items | 25.11% | 24.75% | 25.50% | 24.75% |
Shareholders' Equity - Activities Under Share Repurchase Program (Detail) - CAD ($) $ / shares in Units, $ in Millions |
3 Months Ended | 9 Months Ended | 11 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
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Number of Common Shares repurchased | 1,600,000 | 3,200,000 | 2,500,000 | ||
Amount of repurchase (in millions) | $ 471 | $ 952 | $ 559 | ||
Current Normal Course Issuer Bid (NCIB) [Member] | |||||
Number of Common Shares repurchased | 1,519,540 | 3,183,461 | 5,370,000 | ||
Weighted-average price per share | $ 310.36 | $ 299.09 | |||
Amount of repurchase (in millions) | $ 471 | $ 952 | $ 1,520 | ||
2017 Normal Course Issuer Bid (NCIB) [Member] | |||||
Number of Common Shares repurchased | 0 | 2,495,962 | |||
Weighted-average price per share | $ 0 | $ 223.97 | |||
Amount of repurchase (in millions) | $ 0 | $ 559 |
Leases - Weighted Average Remaining Lease Terms and Discount Rates (Details) |
Sep. 30, 2019 |
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Leases [Abstract] | |
Operating lease, Weighted average remaining lease term | 7 years |
Finance lease, Weighted average remaining lease term | 4 years |
Operating lease, Weighted average discount rate | 3.46% |
Finance lease, Weighted average discount rate | 7.05% |
Stock-Based Compensation - Weighted-Average Fair Value Assumptions (Details) - CAD ($) |
3 Months Ended | 9 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
May 06, 2019 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Dec. 31, 2019 |
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Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Dividends declared per share | $ 0.8300 | $ 0.6500 | $ 2.3100 | $ 1.8625 | ||
Stock Options | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Weighted average grant price | $ 272.66 | |||||
Expected option life (years) | 5 years | |||||
Risk-free interest rate | 2.22% | |||||
Expected stock price volatility | 25.04% | |||||
Expected annual dividends per share | $ 2.6191 | |||||
Estimated forfeiture rate | 6.05% | |||||
Weighted average grant date fair value per option granted during the period | $ 63.69 | |||||
Dividends declared per share | $ 0.8300 | |||||
Stock Options | Forecast [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Expected annual dividends per share | $ 3.3200 |
Earnings Per Share (Tables) |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares Used in the Earnings Per Share Calculation | The number of shares used in earnings per share calculations is reconciled as follows:
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Stock-Based Compensation (Tables) |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||
Weighted-Average Fair Value Assumptions | The weighted-average fair value assumptions were approximately:
(5) The Company estimates forfeitures based on past experience. This rate is monitored on a periodic basis.
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Financial Instruments |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Financial Instruments | Financial instruments A. Fair values of financial instruments The Company categorizes its financial assets and liabilities measured at fair value into a three-level hierarchy established by GAAP that prioritizes those inputs to valuation techniques used to measure fair value based on the degree to which they are observable. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices in active markets for identical assets and liabilities; Level 2 inputs, other than quoted prices included within Level 1, are observable for the asset or liability either directly or indirectly; and Level 3 inputs are not observable in the market. When possible, the estimated fair value is based on quoted market prices and, if not available, it is based on estimates from third party brokers. For non-exchange-traded derivatives classified as Level 2, the Company uses standard valuation techniques to calculate fair value. Primary inputs to these techniques include observable market prices (interest, FX, and commodity) and volatility, depending on the type of derivative and the nature of the underlying risk. The Company uses inputs and data used by willing market participants when valuing derivatives and considers its own credit default swap spread as well as those of its counterparties in its determination of fair value. All derivatives and long-term debt are classified as Level 2. The carrying values of financial instruments equal or approximate their fair values with the exception of long-term debt:
The estimated fair value of current and long-term borrowings has been determined based on market information where available, or by discounting future payments of principal and interest at estimated interest rates expected to be available to the Company at period end. B. Financial risk management Derivative financial instruments Derivative financial instruments may be used to selectively reduce volatility associated with fluctuations in interest rates, FX rates, the price of fuel, and stock-based compensation expense. Where derivatives are designated as hedging instruments, the relationship between the hedging instruments and their associated hedged items is documented, as well as the risk management objective and strategy for the use of the hedging instruments. This documentation includes linking the derivatives that are designated as fair value or cash flow hedges to specific assets or liabilities on the Company's Interim Consolidated Balance Sheets, commitments, or forecasted transactions. At the time a derivative contract is entered into and at least quarterly thereafter, an assessment is made as to whether the derivative item is effective in offsetting the changes in fair value or cash flows of the hedged items. The derivative qualifies for hedge accounting treatment if it is effective in substantially mitigating the risk it was designed to address. It is not the Company’s intent to use financial derivatives or commodity instruments for trading or speculative purposes. FX management The Company conducts business transactions and owns assets in both Canada and the United States. As a result, the Company is exposed to fluctuations in the value of financial commitments, assets, liabilities, income, or cash flows due to changes in FX rates. The Company may enter into FX risk management transactions primarily to manage fluctuations in the exchange rate between Canadian and U.S. currencies. FX exposure is primarily mitigated through natural offsets created by revenues, expenditures, and balance sheet positions incurred in the same currency. Where appropriate, the Company may negotiate with customers and suppliers to reduce the net exposure. Net investment hedge The FX gains and losses on long-term debt are mainly unrealized and can only be realized when U.S. dollar-denominated long-term debt matures or is settled. The Company also has long-term FX exposure on its investment in foreign subsidiaries with a U.S. dollar functional currency. The majority of the Company’s U.S. dollar-denominated long-term debt has been designated as a hedge of the net investment in foreign subsidiaries. This designation has the effect of mitigating volatility on Net income by offsetting long-term FX gains and losses on U.S. dollar-denominated long-term debt and gains and losses on its net investment. The effect of the net investment hedge recognized in “Other comprehensive income” for the three and nine months ended September 30, 2019 was an unrealized FX loss of $68 million and an unrealized FX gain of $172 million, respectively (three and nine months ended September 30, 2018 - unrealized FX gain of $96 million and an unrealized FX loss of $177 million, respectively). Interest rate management The Company is exposed to interest rate risk, which is the risk that the fair value or future cash flows of a financial instrument will vary as a result of changes in market interest rates. In order to manage funding needs or capital structure goals, the Company enters into debt or capital lease agreements that are subject to either fixed market interest rates set at the time of issue or floating rates determined by ongoing market conditions. Debt subject to variable interest rates exposes the Company to variability in interest expense, while debt subject to fixed interest rates exposes the Company to variability in the fair value of debt. To manage interest rate exposure, the Company accesses diverse sources of financing and manages borrowings in line with a targeted range of capital structure, debt ratings, liquidity needs, maturity schedule, and currency and interest rate profiles. In anticipation of future debt issuances, the Company may enter into forward rate agreements, that are designated as cash flow hedges, to substantially lock in all or a portion of the effective future interest expense. The Company may also enter into swap agreements, designated as fair value hedges, to manage the mix of fixed and floating rate debt. Forward starting swaps During the second quarter of 2018, the Company settled a notional U.S. $500 million of forward starting swaps related to the U.S. $500 million 4.000% 10-year Notes issued in the same period. The fair value of these derivative instruments at the time of settlement was a loss of U.S. $19 million ($24 million). The changes in fair value from forward starting swaps for the three and nine months ended September 30, 2019 was $nil (three and nine months ended September 30, 2018 - $nil and a gain of $31 million, respectively). This was recorded in "Accumulated other comprehensive loss”, net of tax, and is being reclassified to "Net interest expense" on the Interim Consolidated Statements of Income until the underlying hedged notes are repaid. For the three and nine months ended September 30, 2019, a net loss of $2 million and $7 million, respectively, related to settled forward starting swap hedges have been amortized to “Net interest expense” (three and nine months ended September 30, 2018 - net loss of $2 million and $7 million, respectively). The Company expects that during the next twelve months, an additional $9 million of net losses will be amortized to “Net interest expense”.
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Earnings Per Share |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share | Earnings per share At September 30, 2019, the number of CP Common Shares outstanding was 137.5 million (September 30, 2018 - 142.6 million). Basic earnings per share have been calculated using net income for the period divided by the weighted-average number of shares outstanding during the period. The number of shares used in earnings per share calculations is reconciled as follows:
For the three months ended September 30, 2019, there were no options excluded from the computation of diluted earnings per share (three months ended September 30, 2018 - 0.3 million). For the nine months ended September 30, 2019, there were 0.1 million options excluded from the computation of diluted earnings per share because their effects were not dilutive (nine months ended September 30, 2018 - 0.2 million).
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Shareholders' Equity - Narrative (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended | 11 Months Ended | ||||
---|---|---|---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Oct. 19, 2018 |
May 10, 2017 |
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Number of Common Shares repurchased | 1,600,000 | 3,200,000 | 2,500,000 | ||||
Amount of repurchase (in millions) | $ 471 | $ 952 | $ 559 | ||||
Current Normal Course Issuer Bid (NCIB) [Member] | |||||||
Common Shares authorized to be repurchased | 5,680,000 | ||||||
Number of Common Shares repurchased | 1,519,540 | 3,183,461 | 5,370,000 | ||||
Amount of repurchase (in millions) | $ 471 | $ 952 | $ 1,520 | ||||
2017 Normal Course Issuer Bid (NCIB) [Member] | |||||||
Common Shares authorized to be repurchased | 4,380,000 | ||||||
Number of Common Shares repurchased | 0 | 2,495,962 | |||||
Amount of repurchase (in millions) | $ 0 | $ 559 |
Leases - Supplemental Balance Sheet Information (Details) $ in Millions |
Sep. 30, 2019
CAD ($)
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Leases [Abstract] | |
Operating lease, ROU asset | $ 376 |
Finance lease, ROU asset | 179 |
Operating lease, ROU liability, current | 73 |
Finance lease, ROU liability, current | 7 |
Operating lease, ROU liability, non-current | 297 |
Finance lease, ROU liability, non-current | $ 148 |
Leases (Tables) |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Lease Expense | The components of lease expense are as follows:
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Supplemental Balance Sheet Information | Supplemental balance sheet information related to leases is as follows:
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Weighted Average Remaining Lease Terms and Discount Rates | The following table provides the Company's weighted average remaining lease terms and discount rates:
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Supplemental Information Related to Leases | Supplemental information related to leases is as follows:
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Maturities of Operating and Finance Lease Liabilities | Maturities of lease liabilities are as follows:
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Pension and Other Benefits (Tables) |
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Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Periodic Benefit Cost for Defined Benefit Pension Plans and Other Benefits | Net periodic benefit costs for defined benefit pension plans and other benefits recognized in the three and nine months ended September 30, 2019 and 2018 included the following components:
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Revenues - Contract Liabilities (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Contract with Customer, Liability [Abstract] | ||||
Contract liability, opening balance | $ 74 | $ 3 | $ 2 | $ 2 |
Revenue recognized that was included in the contract liability balance at the beginning of the period | (8) | (3) | (2) | (2) |
Increases due to consideration received, excluding amounts recognized as revenue during the period | 4 | 2 | 70 | 2 |
Contract liability, closing balance | $ 70 | $ 2 | $ 70 | $ 2 |
Shareholders' Equity |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shareholders' Equity | Shareholders' equity On October 19, 2018, the Company announced a normal course issuer bid ("NCIB"), commencing October 24, 2018, to purchase up to 5.68 million of its Common Shares in the open market for cancellation on or before October 23, 2019. As at September 30, 2019, the Company had purchased 5.37 million Common Shares for $1,520 million under this NCIB program. On May 10, 2017, the Company announced an NCIB, commencing May 15, 2017, to purchase up to 4.38 million Common Shares for cancellation before May 14, 2018. The Company completed this NCIB on May 10, 2018. All purchases were made in accordance with the NCIB at prevalent market prices plus brokerage fees, or such other prices that were permitted by the Toronto Stock Exchange, with consideration allocated to share capital up to the average carrying amount of the shares and any excess allocated to retained earnings. The following table describes activities under the share repurchase program:
(1) Includes shares repurchased but not yet canceled at quarter end. (2) Includes brokerage fees.
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Income Taxes |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | Income taxes
During the nine months ended September 30, 2019, legislation was enacted to decrease the Alberta provincial corporate income tax rate. As a result of this change, the Company recorded a deferred tax recovery of $88 million in the second quarter of 2019 related to the revaluation of its deferred income tax balances as at January 1, 2019. During the nine months ended September 30, 2018, legislation was enacted to decrease the Iowa and Missouri state corporate income tax rates. As a result of these changes, the Company recorded a deferred tax recovery of $21 million in the second quarter of 2018 related to the revaluation of deferred income tax balances as at January 1, 2018. The effective tax rates for the three and nine months ended September 30, 2019 were 25.43% and 21.06%, respectively, compared to 24.23% and 23.95%, respectively for the same periods of 2018. For the three months ended September 30, 2019, the effective tax rate excluding the discrete item of the foreign exchange ("FX") loss of $25 million on debt and lease liabilities, was 25.11%. For the three months ended September 30, 2018, the effective tax rate excluding the discrete item of the FX gain of $38 million on debt, was 24.75%. For the nine months ended September 30, 2019, the effective tax rate excluding the discrete items of the FX gain of $57 million on debt and lease liabilities and the $88 million deferred tax recovery on the Alberta provincial corporate income tax rate change, was 25.50%. |
Other (Income) Expense (Tables) |
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Other Income and Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income and Expenses |
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Leases (Policies) |
9 Months Ended |
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Sep. 30, 2019 | |
Leases [Abstract] | |
Leases | The Company has leases for rolling stock, buildings, vehicles, railway equipment, and roadway machines. CP has entered into rolling stock leases that are fully variable or contain both fixed and variable components. Variable components are dependent on the hours and miles that the underlying equipment has been used. Fixed term, short-term, and variable operating lease costs are recorded in Equipment rents and Purchased services and other on the Company's Interim Consolidated Income Statements. Components of finance lease costs are recorded in Depreciation and amortization and Net interest expense on the Company's Interim Consolidated Income Statements. The Company determines lease existence and classification at the lease inception date. Leases are identified when an agreement conveys the right to control identified property for a period of time in exchange for consideration. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating and finance lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. Lease payments include fixed and variable payments that are based on an index or a rate. If the Company's leases do not provide a readily determinable implicit interest rate, the Company uses internal incremental secured borrowing rates for comparable tenor in the same currency at the commencement date in determining the present value of lease payments. Operating and finance lease ROU assets also include lease prepayments and initial direct costs, but are reduced by lease incentives. The lease term may include periods associated with options to extend or exclude periods associated with options to terminate the lease when it is reasonably certain that the Company will exercise these options. The Company’s leases have remaining terms from one to 12 years, some of which include options to extend for up to an additional 10 years and some of which include options to terminate within one year. The Company has short-term operating leases with terms of 12 months or less, some of which include options to purchase that the Company is not reasonably certain to exercise. The Company has elected to apply the recognition exemption and, as such, accounts for leases with a term of 12 months or less off-balance sheet. Therefore, lease payments on these short-term operating leases are not included in operating lease ROU assets and liabilities, but are recognized as an expense in the Company's Consolidated Statements of Income on a straight-line basis over the term of the lease. Further, the Company has elected to combine lease and non-lease components for all leases, except for leases of roadway machines.
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Contingencies |
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Contingencies | Contingencies In the normal course of its operations, the Company becomes involved in various legal actions, including claims relating to injuries and damage to property. The Company maintains provisions it considers adequate for such actions. While the outcome with respect to actions outstanding or pending at September 30, 2019 cannot be predicted with certainty, it is the opinion of management that their resolution will not have a material adverse effect on the Company’s financial position or results of operations. Legal proceedings related to Lac-Mégantic rail accident On July 6, 2013, a train carrying petroleum crude oil operated by Montreal Maine and Atlantic Railway (“MMAR”) or a subsidiary, Montreal Maine & Atlantic Canada Co. (“MMAC”, collectively “MMA Group”), derailed in Lac-Mégantic, Québec. The derailment occurred on a section of railway owned and operated by the MMA Group and while the MMA Group had custody and control of the train. Following the derailment, MMAC sought court protection in Canada under the Companies’ Creditors Arrangement Act, R.S.C., 1985, c. C-36 and MMAR filed for bankruptcy in the United States. Plans of arrangement were approved in both Canada and the U.S. (the “Plans”), providing for the distribution of approximately $440 million amongst those claiming derailment damages. A number of legal proceedings, set out below, were commenced in Canada and the U.S. against CP and others:
The AGQ Action, the Class Action and the Promutuel Action have been consolidated and scheduled for a joint liability trial commencing September 14, 2020, followed by a damages trial, if necessary.
At this stage of the proceedings, any potential responsibility and the quantum of potential losses cannot be determined. Nevertheless, CP denies liability and is vigorously defending these proceedings. Environmental liabilities Environmental remediation accruals, recorded on an undiscounted basis unless a reliable, determinable estimate as to an amount and timing of costs can be established, cover site-specific remediation programs. The accruals for environmental remediation represent CP’s best estimate of its probable future obligation and include both asserted and unasserted claims, without reduction for anticipated recoveries from third parties. Although the recorded accruals include CP’s best estimate of all probable costs, CP’s total environmental remediation costs cannot be predicted with certainty. Accruals for environmental remediation may change from time to time as new information about previously untested sites becomes known, and as environmental laws and regulations evolve and advances are made in environmental remediation technology. The accruals may also vary as the courts decide legal proceedings against outside parties responsible for contamination. These potential charges, which cannot be quantified at this time, may materially affect income in the particular period in which a charge is recognized. Costs related to existing, but as yet unknown, or future contamination will be accrued in the period in which they become probable and reasonably estimable. The expense included in “Purchased services and other” for the three and nine months ended September 30, 2019 was $2 million and $4 million, respectively (three and nine months ended September 30, 2018 - $2 million and $4 million, respectively). Provisions for environmental remediation costs are recorded in “Other long-term liabilities”, except for the current portion which is recorded in “Accounts payable and accrued liabilities”. The total amount provided at September 30, 2019 was $80 million (December 31, 2018 - $82 million). Payments are expected to be made over 10 years through 2029.
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Revenues |
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Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenues The following table disaggregates the Company’s revenues from contracts with customers by major source:
Contract liabilities Contract liabilities represent payments received for performance obligations not yet satisfied and relate to deferred revenue and are presented as components of Accounts payable and accrued liabilities and Other long-term liabilities on the Company's Interim Consolidated Balance Sheets. The following tables summarize the changes in contract liabilities for the three and nine months ended September 30, 2019 and 2018:
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Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component - Amounts in Pension and Post-retirement Defined Benefit Plans Reclassified from AOCL (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Income tax expense (recovery) | $ 211 | $ 199 | $ 474 | $ 443 |
Reclassification out of Accumulated Other Comprehensive Income [Member] | ||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||||
Amortization of prior service costs | (1) | (1) | 0 | (2) |
Recognition of net actuarial loss | 21 | 29 | 62 | 88 |
Total before income tax | 20 | 28 | 62 | 86 |
Income tax expense (recovery) | (5) | (9) | (15) | (24) |
Total net of income tax | $ 15 | $ 19 | $ 47 | $ 62 |
Earnings Per Share - Number of Shares Used in the Earnings Per Share Calculations (Details) - shares shares in Millions |
3 Months Ended | 9 Months Ended | ||
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Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Earnings Per Share [Abstract] | ||||
Weighted average basic shares outstanding | 138.1 | 142.6 | 139.3 | 143.2 |
Dilutive effect of stock options | 0.6 | 0.5 | 0.5 | 0.5 |
Weighted average diluted shares outstanding | 138.7 | 143.1 | 139.8 | 143.7 |
Leases - Components of Lease Expense (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
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Sep. 30, 2019 |
Sep. 30, 2019 |
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Leases [Abstract] | ||
Operating lease cost | $ 22 | $ 67 |
Short-term lease cost | 1 | 3 |
Variable lease cost | 3 | 9 |
Sublease income | (1) | (2) |
Finance lease cost, Amortization of right-of-use assets | 2 | 7 |
Finance lease cost, Interest on lease liabilities | 3 | 8 |
Total lease costs | $ 30 | $ 92 |
Financial Instruments - Fair Value and Carrying Value of Long-term Debt (Details) - CAD ($) $ in Millions |
Sep. 30, 2019 |
Dec. 31, 2018 |
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Schedule of Investments [Line Items] | ||
Long-term Debt, Fair value | $ 10,420 | $ 9,639 |
Carrying Value Measurement [Member] | ||
Schedule of Investments [Line Items] | ||
Long-term Debt, Carrying value | $ 8,983 | $ 8,696 |
Leases - Supplemental Information Related to Leases (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended |
---|---|---|
Sep. 30, 2019 |
Sep. 30, 2019 |
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Leases [Abstract] | ||
Operating cash outflows from operating leases | $ 20 | $ 66 |
Operating cash outflows from finance leases | 5 | 10 |
Financing cash outflows from finance leases | 2 | 4 |
Right-of-use assets obtained in exchange for operating lease liabilities | 8 | 31 |
Right-of-use assets obtained in exchange for finance lease liabilities | $ 0 | $ 4 |
Debt |
9 Months Ended |
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Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Debt | Debt Credit facility Effective September 27, 2019, the Company amended and restated its revolving credit facility agreement to, among other things, increase the total amount available to U.S. $1.3 billion (December 31, 2018 - U.S. $1.0 billion). The amended and restated revolving credit facility consists of a U.S. $1.0 billion tranche maturing September 27, 2024 (extended from June 28, 2023, previously) and a U.S. $300 million tranche maturing September 27, 2021. As at September 30, 2019, the revolving credit facility was undrawn (December 31, 2018 - undrawn). Effective September 27, 2019, the Company also reduced its bilateral letter of credit facilities to $300 million (December 31, 2018 - $600 million). Retirement of long-term debt During the three months ended June 30, 2019, the Company repaid U.S. $350 million 7.250% 10-year notes at maturity for a total of U.S. $350 million ($471 million). Issuance of long-term debt During the three months ended March 31, 2019, the Company issued $400 million 3.150% 10-year notes due March 13, 2029 for net proceeds of $397 million. These notes pay interest semi-annually and are unsecured but carry a negative pledge. Commercial paper program The Company has a commercial paper program which enables it to issue commercial paper up to a maximum aggregate principal amount of U.S. $1.0 billion in the form of unsecured promissory notes. The commercial paper is backed by the U.S. $1.3 billion revolving credit facility. As at September 30, 2019, the Company had total commercial paper borrowings of U.S. $455 million ($603 million), presented in "Long-term debt maturing within one year" on the Company's Interim Consolidated Balance Sheets (December 31, 2018 - $nil). The weighted-average interest rate on these borrowings was 2.38%. The Company presents issuances and repayments of commercial paper, all of which have a maturity of less than 90 days, in the Company's Interim Consolidated Statements of Cash Flows on a net basis.
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Changes in Accumulated Other Comprehensive Loss ("AOCL") by Component |
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Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Accumulated Other Comprehensive Loss (AOCL) by Component | Changes in Accumulated other comprehensive loss ("AOCL") by component
(1) Amounts are presented net of tax.
(1) Amounts are presented net of tax. Amounts in Pension and post-retirement defined benefit plans reclassified from AOCL are as follows:
(1) Impacts "Other components of net periodic benefit recovery" on the Interim Consolidated Statements of Income.
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Stock-Based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-based compensation At September 30, 2019, the Company had several stock-based compensation plans including stock option plans, various cash-settled liability plans, and an employee share purchase plan. These plans resulted in an expense for the three and nine months ended September 30, 2019 of $15 million and $88 million, respectively (three and nine months ended September 30, 2018 - $28 million and $60 million, respectively). Stock option plan In the nine months ended September 30, 2019, under CP’s stock option plans, the Company issued 224,730 options at the weighted-average price of $272.66 per share, based on the closing price on the grant date. Pursuant to the employee plan, these options may be exercised upon vesting, which is between 12 months and 48 months after the grant date, and will expire after seven years. Under the fair value method, the fair value of the stock options at the grant date was approximately $14 million. The weighted-average fair value assumptions were approximately:
Performance share unit plan In the nine months ended September 30, 2019, the Company issued 134,260 Performance Share Units ("PSUs") with a grant date fair value of approximately $36 million. These units attract dividend equivalents in the form of additional units based on the dividends paid on the Company’s Common Shares. PSUs vest and are settled in cash or in CP Common Shares, approximately three years after the grant date, contingent upon CP’s performance ("performance factor"). The fair value of these PSUs is measured periodically until settlement, using either a lattice-based valuation model or a Monte Carlo simulation model. The performance period for 133,681 PSUs issued in the nine months ended September 30, 2019 is January 1, 2019 to December 31, 2021, and the performance factors for these PSUs are Return on Invested Capital ("ROIC"), Total Shareholder Return ("TSR") compared to the S&P/TSX 60 Index, and TSR compared to Class I railways. The performance factors for the remaining 579 PSUs are annual revenue for the fiscal year 2020, diluted earnings per share for the fiscal year 2020, and share price appreciation. The performance period for the PSUs issued in 2016 was January 1, 2016 to December 31, 2018. The performance factors for these PSUs were Operating Ratio, ROIC, TSR compared to the S&P/TSX 60 index, and TSR compared to Class I railways. The resulting payout was 177% of the outstanding units multiplied by the Company's average share price that was calculated using the last 30 trading days preceding December 31, 2018. In the three months ended March 31, 2019, payouts occurred on the total outstanding awards, including dividends reinvested, totaling $54 million on 117,228 outstanding awards. Deferred share unit plan In the nine months ended September 30, 2019, the Company granted 17,653 Deferred Share Units ("DSUs") with a grant date fair value of approximately $5 million. DSUs vest over various periods of up to 48 months and are only redeemable for a specified period after employment is terminated. An expense to income for DSUs is recognized over the vesting period for both the initial subscription price and the change in value between reporting periods.
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Financial Instruments (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2019 | |||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Fair Value and Carrying Value of Long-term Debt | The carrying values of financial instruments equal or approximate their fair values with the exception of long-term debt:
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Accounting Changes - Impact of ASC 842 Adoption (Details) - CAD ($) $ in Millions |
Sep. 30, 2019 |
Jan. 01, 2019 |
Dec. 31, 2018 |
---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Properties | $ 18,909 | $ 18,406 | $ 18,418 |
Other assets | 462 | 470 | 71 |
Accounts payable and accrued liabilities | 1,415 | 1,507 | 1,449 |
Other long-term liabilities | 579 | 574 | 237 |
Deferred income taxes | 3,635 | 3,515 | 3,518 |
Retained earnings | $ 7,180 | 6,630 | $ 6,635 |
Accounting Standards Update 2016-02 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Properties | (12) | ||
Other assets | 399 | ||
Accounts payable and accrued liabilities | 58 | ||
Other long-term liabilities | 337 | ||
Deferred income taxes | (3) | ||
Retained earnings | $ (5) |
INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (unaudited) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
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Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 618 | $ 622 | $ 1,776 | $ 1,406 |
Net (loss) gain in foreign currency translation adjustments, net of hedging activities | (8) | 12 | 23 | (24) |
Change in derivatives designated as cash flow hedges | 2 | 1 | 8 | 36 |
Change in pension and post-retirement defined benefit plans | 20 | 28 | 61 | 86 |
Other comprehensive income before income taxes | 14 | 41 | 92 | 98 |
Income tax recovery (expense) on above items | 3 | (22) | (41) | (11) |
Other comprehensive income (loss) | 17 | 19 | 51 | 87 |
Comprehensive income | $ 635 | $ 641 | $ 1,827 | $ 1,493 |
Basis of Presentation |
9 Months Ended |
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Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of presentation These unaudited interim consolidated financial statements of Canadian Pacific Railway Limited (“CP”, or “the Company”), expressed in Canadian dollars, reflect management’s estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America (“GAAP”). They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2018 annual consolidated financial statements and notes included in CP's 2018 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2018 annual consolidated financial statements, except for the newly adopted accounting policy discussed in Note 2. CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues. This seasonality could impact quarter-over-quarter comparisons. In management’s opinion, the unaudited interim consolidated financial statements include all adjustments (consisting of normal and recurring adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year.
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Revenues (Tables) |
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Sep. 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table disaggregates the Company’s revenues from contracts with customers by major source:
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Contract Liabilities | Contract liabilities Contract liabilities represent payments received for performance obligations not yet satisfied and relate to deferred revenue and are presented as components of Accounts payable and accrued liabilities and Other long-term liabilities on the Company's Interim Consolidated Balance Sheets. The following tables summarize the changes in contract liabilities for the three and nine months ended September 30, 2019 and 2018:
|
Basis of Presentation (Policies) |
9 Months Ended |
---|---|
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | These unaudited interim consolidated financial statements of Canadian Pacific Railway Limited (“CP”, or “the Company”), expressed in Canadian dollars, reflect management’s estimates and assumptions that are necessary for their fair presentation in conformity with generally accepted accounting principles in the United States of America (“GAAP”). They do not include all disclosures required under GAAP for annual financial statements and should be read in conjunction with the 2018 annual consolidated financial statements and notes included in CP's 2018 Annual Report on Form 10-K. The accounting policies used are consistent with the accounting policies used in preparing the 2018 annual consolidated financial statements, except for the newly adopted accounting policy discussed in Note 2. CP's operations can be affected by seasonal fluctuations such as changes in customer demand and weather-related issues. This seasonality could impact quarter-over-quarter comparisons. In management’s opinion, the unaudited interim consolidated financial statements include all adjustments (consisting of normal and recurring adjustments) necessary to present fairly such information. Interim results are not necessarily indicative of the results expected for the fiscal year.
|
Income Taxes - Summary of Income Tax Expense (Details) - CAD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2019 |
Sep. 30, 2018 |
Sep. 30, 2019 |
Sep. 30, 2018 |
|
Income Tax Disclosure [Abstract] | ||||
Current income tax expense | $ 115 | $ 122 | $ 358 | $ 288 |
Deferred income tax (recovery) expense | 96 | 77 | 116 | 155 |
Income tax expense | $ 211 | $ 199 | $ 474 | $ 443 |
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